Monday, July 10, 2017

Nathan Bostock – CEO, Santander on embracing tech changes in banking

Nathan, tell us, how did you come to be working in finance? Is this what you wanted to do when you were a kid?

Well, actually, I was a mathematician from university, and at the time, I thought I’d like to get a broader background in finance, and a further […] insight, so I decided to do accountancy. That  enabled me to see different businesses, different industries, and it introduced me to trading rooms in banks. So, I decided, actually, that was a very exciting, fast moving technology place, and it was at the time that interest rate derivatives, etc.,were really first being established.

There was a lot of innovation back then, a lot of excitement.


It’s interesting that people find things that interest them, and are drawn towards it […] way back then, did you ever see yourself becoming the CEO of a division of a bank?

No, not at all. No, I [was] just caught up in the moment. It was back in the 80s, and there was a huge amount going on in the city, and opening up of markets, etc. No, I’ve really just taken different opportunities to do different jobs, so I’ve been very lucky. I’ve been across front office businesses, so trading rooms, corporate, retail, but I’ve also run things like the finance side, and technology and operations and HR and products and marketing. [It is] probably, these days, quite hard, to be given those opportunities, given the 2 way regulators think much more vertically, but [it was] a fantastic opportunity to really see how everything fits together.

 “I’ve been across front office businesses, trading rooms, corporate, retail, but I’ve also run the finance side, technology, operations, HR and products and marketing.”

I love this idea that you caught the bug of finance and technology during the big bang in the 80s.


“We partner with fintechs, and we run an innovation fund, and that currently, is about $200 million.”

Banking is, from our perspective, becoming more technology driven. How are you, at Santander, embracing those changes?

Well, it’s interesting, because some of the people in banking will say they’re the biggest technology companies in the world. They’re certainly some of the biggest in terms of spend, and they’re much more complicated, than people probably imagine. If you, took the lines of code and multiplied it up, they’d have spent billions in creating these things. But here, I think, in terms of, the future, and thinking about technology and its influence on banking, there are three particular areas where we do things:
One is, we have our own type of labs, and so we test things. It might be private Cloud, it might be blockchain, it might be those types of things. We partner with fintechs, and we run an innovation fund, and that currently, is about $200 million, and we’ve probably looked at about 1,500 different fintechs in the world, we’ve invested in a number, and we have a certain type of criteria, not just a return on equity criteria, but very much a, “Is this a disruptive technology? Do we see it influencing our business?” etc. So, we have broader criteria by which we look to invest. And so those three give us a variety of ways of staying very relevant to the speed of change of technology.

It’s interesting that you’ve got the lab, and the ability to incubate something internally, but also with the fund, and with some of the outreach programmes, that it doesn’t have to be invented at Santander to impact your business. Is that fair?

It is, yes, absolutely. If I go back to my times in the trading rooms, I was there at the beginning and one thing I learnt, you in options is that actually, they provide you with opportunity. So, you pay a premium and you get an option from it. Well, this is very similar. If you took blockchain as a good example, I think it’s very hard for people to say, “This will be the winning formula.”

Yes, tell me about it.

However, being engaged in these different aspects is very, very important, because ultimately, it will be significant.

That’s a very great point. A friend of mine, Richard Brown, who’s now the CTO of R3 said to me in 2013, “How do you a buy an option on the future of blockchain?” and I think that’s a really, really interesting way of looking at it, and again, your career of having seen different sides of banking usually gives you an interesting perspective.

And those three things are the ways we look to take that option choice, you because you can do it in different ways, leveraging different things. Your own ability, other people’s ability, etc.

So, you talked about the technology boom in the 80s. I think now we’re finding ourselves in a position where a lot of that technology is still around in banking.


Do you think there’s a way in which organisations have to transform digitally, to really come forward? Or can they have a best of both? Because the technology from the 80s works, is stable, has great uptime, but at the same time, has some challenges. How do you balance that, as an organisation?

Yes, I think there are certain things that have happened during the years, and the way technology is having a greater influence, but many of the things that are dramatically changing life today existed, ten years ago, but they’ve evolved. And so, I think of things like  APIs, and the ability to connect things, the ability to extract data, for instance, is a classic, [a]  really big one in terms of shifting the way that people interact, from a customer perspective. Processing power. Just the sheer ability to do things that you couldn’t do previously. Mobile, for instance, and the way that it’s becoming a user device that everybody’s very comfortable with. You know, multiple times the processing power of Apollo 13, it doesn’t really matter, it’s a lifestyle device that people now feel comfortable with, and it’s changing the way that we [at Santander] interact with customers. So, our thought process is very much one that, in the future, we have to think of ourselves versus the greatest experiences that people have today. So, it might be your interaction with, I don’t know, Amazon, or Netflix, but that’s your standard. And so really, our mindset is that we’re a user of technology for customer experience, based around, increasingly, personalisation, simplicity, speed, and then ultimately, if it’s in banking, we think fairness. Fairness in terms of, will people pay for a product? Yes, they will, but it has to be transparent, it has to be fair, etc. But it’s utilising customer-centricity and the power of technology, actually, to drive experience rather than anything else.

“[Mobile is] a lifestyle device that people now feel comfortable with, and it’s changing the way that we interact with customers.”

It’s really interesting that you mentioned APIs and driving experience and customer- centricity, because you find yourself, under PSD2, in a world in which there’s an opportunity for a marketplace. For customers to have their Santander information appear somewhere else – for something from somewhere else to appear inside a Santander app. Do you think there are challenges to that, and do you think there are opportunities? And secondly, do you feel that the role of an organisation going forward is more about owning the relationship with that customer? Or being the logo that they trust, even if it’s appearing through voice, or appearing through some other channel?

I think the crucial thing, in a PSD2 world, from our perspective, you have to think opportunity, and of course, you also think an element of defensive. You have to. But we’re a challenger, and that provides us with opportunity. I always think, if you’re a very large incumbent, your natural thing is probably to think defensive, yes? If you’re a challenger, then your mindset is one of innovation, it’s one of changing the status quo, and therefore, you look to the opportunities that something like PSD2 will provide, and that’s certainly our mindset. I think it does create a real question for the industry, for regulators, etc. Is it safety and security of data, and what does that mean, and what are the legal requirements around it, and all these types of thing. This, to me, is really going to evolve. So, you open it up dramatically, you’re then going to face, let’s call it some further questions. These are ones that I think will have to be there in the future, and the question around,trust, etc. This is why I think [PSD2] may well prove very important, because, as you know, we face issues around cyber, around fraud, and so getting this right balance between objectivity of openness, such that you can create things for people, and at the same time, them feeling fully trusted, in terms of who’s got their data, what it’s being used for, I think this is a journey we’re going to live.

“If you’re a challenger, then your mindset is one of innovation, it’s one of changing the status quo.”

It’s a massive responsibility that retail banks have. Not every customer is fully technically savvy, and to make their transaction information available to other companies [is] a huge responsibility, and one that I see you take very, very seriously. Do you feel that partners can play more of a role? I know you’ve partnered with Kabbage, and many others, in building end to end propositions for customers?

Yes, firstly you raise a fantastic point, my view is, [that] banks have always organised themselves around their own world, and therefore they’ve organised themselves vertically. So, they have vertical departments, and they have lots and lots of handoffs. That’s not a customer experience. A customer experience is something seamless, and so firstly, banks have to rethink their world, which is end to end, and the way we’ve used partners, and I think it’s interesting, because in fintech we’ve gone through that thing where banks were the old luddites Neanderthals, and fintechs were fantastically, new and modern, but actually, there’s a symbiotic world, because one of the things that’s difficult for fintechs is customers. Customer acquisition is expensive. One of the things that banks have are large amounts of customers, and so what we’ve been doing is, we’ve been focusing on, I’ll call it specific needs. So, we say we want to solve something, Kabbage is a good example. We don’t have an unsecured lending product for this part of the marketplace, with this speed, with this type of nature. Okay, we could either try to develop something internally, or we can pick somebody externally that’s got some really bright people, has really shown a lead on it, and then we actually have to think about, how do you become an integrator of that?

“We’re in the early stages of learning how to truly partner”.

That’s very interesting.

But really, I would say, we’re in the early stages of learning how to truly partner, because I think, in the past, people either bought software or they did JVs. They didn’t partner, and one of the things about partnership is you have to learn what being a partner is, you know? And so I think this is where we are at the moment.

Especially if one’s big and one’s small, there’s a huge cultural gap there.


At Santander, you have a reputation for digital talent being something that you’re really high on. How do you foster that innovative culture, and make people who could go work for a tech company in Silicon Roundabout, want to work for Santander? I think partnerships with startups are a part of it, but I’m sure there’s more to it.

Yes, people choose different environments, ecosystems, for lots of different reasons. One of the things I think is fairly fundamental here is probably three different aspects. One is, is, I’ll call it behaviours. It’s the environment in which people are operating. So, our behaviours, some of them are really geared to this nature. So, we have [to] “actively collaborate”, we have [to] “speak up”, we have [to] “embrace change”. So, having those types of behaviours creates an environment in which people feel that the best elements of [the] ability to operate as a team and to be listened to, you know, and to be creative. So, we have that. We have the fact that we’re a challenger, so by definition, if you don’t accept the status quo, then that links with those behaviours, to do something different, create something different. And then we’ve also been very focused around the fact that digital is a form of interaction with customers, and if we’re very customer-focused, then we need to evolve that sort of thinking around digital. So, we have omnichannel, of which digital is one. We want to be a challenger, and a mindset, but fundamentally, it’s based on, do you have a set of behaviours that people want to come and join? And I often find you could put a 100-year history into a document, and actually, the people immediately go to page 10, where you talk about the behaviours and the environment, and that’s the thing that is most important to them. Not so much the history. That’s why fintechs are what they are.

Right, it’s very hard to put your finger on what makes the culture of an organisation, but actually, it’s why people want to work somewhere.

It is.

“We’re a challenger, so by definition, if you don’t accept the status quo, do something different, create something different.”

And it’s so, so crucial. It’s the foundation of a lot of good things. [Before we finish] I wanted to ask you the questions we ask everyone, which is, first up, what rule do you live your life by?

Well, it’s a pretty simple one. I always think you should treat people how you want to be treated yourself. And, so, if I, again, go back to our behaviours, some of those sit very much in that space. So, it’s show respect, give support, truly listen. The adjectives are very important, it’s not just the word, it’s actually the thing that you expect to go with it, and I’ve always found that that, to me, is one of the crucial aspects. If you do that, you’ll have diversity, you’ll have a collaborative environment, you’ll have all of those things. If you don’t have it, it doesn’t work.

It’s not about targets and spreadsheets, it’s about behaviours. That’s a really interesting point, and I think that leads on to how do you motivate a team, and what’s the best career advice you’ve ever received?

So, in terms of motivating a team, again, I think you have to have a purpose and an aim, and our purpose is basically to help people and businesses prosper. Prosper being its broadest sense. So, you know, it can either be helping somebody achieve something that they want to do. It might be, you know, to have a new bike, [or] to do X, to do Y. It could just be making their life simpler, so they can spend more time doing something else. So, from our point of view, we have a long term vision of what we want to create, and actually, the thing that motivates people is being able to actually create that future, and improve the lives of customers. So, it’s a very, focused view of life.

In terms of career, that’s a very interesting one. I’m not sure I’ve received that much career guidance, but I’m very happy to share with you learnings over the period. One, for me, is I think you always have to work hard, […] but you do that naturally, if you’re very engaged. People don’t think they’re working hard, but they are, because they’re very engaged, so I’ve always been very engaged. I think you always have to consider that you can learn from everything, even if you’re doing something relatively mundane, there’s something you can actually garner from it, and the other thing is, you have to be prepared to take some risks, take opportunities, but probably the key one is always work for exceptional people. If you can find exceptional people, work for them, learn as much as you can, and then opportunity will present itself.

“The key one is always work for exceptional people…work for them [and] learn as much as you can”

That’s fantastic. I think […] that’s a great piece of advice. Nathan Bostock, the CEO of Santander UK, thank you very much.


Want to know more? Visit or listen to the interview in full on Fintech Insider.

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