CDO interview: Macquarie Banking Group’s digital leader on delivering customer trust

Chief digital officer shares how digital transformation is about instilling a new way of working and customer connection at the banking and financial services group
Luis Uguina

Luis Uguina

Macquarie Banking and Financial Services Group chief digital officer, Luis Uguina, considers himself the “chief trouble making officer” of the c-suite. His ultimate responsibility, he says, is to challenge old ways of working and foster a culture that embraces customer experience in its core vision, agility as its mantra, and failure as a step towards success.

“In five years, perhaps my title won’t have ‘digital’ in the middle, because we’ll be doing things in a different way,” he tells CMO. “But you’re always going to need a role in the company that’s challenging the way you do things and the vision you have for delivering product.”

That’s exactly what Uguina is trying to achieve within Macquarie Group. Arriving in the organisation two years ago initially as digital transformation lead, then promoted to chief digital officer in May, he’s been spearheading a multi-million dollar plan to infuse digital into every aspect of its operations, from product development and innovation to customer experience.

“The secret of Macquarie’s ability to go so fast around digital is because everyone is aligned behind the strategy,” he says. “I arrived two years ago and have seen an amazing change over that time in the way we work, our product, in the way we deliver every day, how we work in a collaborative way, and in the way we have set up the building.”

Uguina has been in the digital space since the early 1990s, and worked for BBVA, Banco Santander and Bankinter in Europe and the US, most recently as BBVA’s global technology chief, before relocating to Australia two years ago.

“Banks are super keen to explore new opportunities in digital and we need to be extremely adaptive to what the customer wants, which means we need to reinvent ourselves everyday,” he says.

Digital equals changing the way you work

For Uguina, digital transformation is ultimately about changing the way you operate. He points to digital disruptors such as Facebook, Spotify, Netflix and Google as shining examples of organisations taking a different approach that extends from the way they come up with ideas, to how they execute around products and services.

The overarching vision fuelling Macquarie’s digital ambition is taking the technology, mindset and approach being used by these leading digital companies and bring a similar level of intuitive, personalised experience to banking. And that requires agility and adaptability, Uguina says, who describes the challenge as “working at the speed of now”.

“It’s about how you change the culture of the company and the way you see the business, the products, the customer interactions and the customer experience,” he says. “From idea to execution, companies like Google, Facebook and Uber are incredibly fast. Banks traditionally have been slower, not because we want to be slower, but because of regulation and the way you need to deal with the law and complexity of compliance. But we need to be extremely fast with delivery if we want to compete with the new native digital players.

“The only way to be extremely fast, while still minimising risk, is to change the way you work. You need to be more agile, which means you need to do things in a completely different way.”

Macquarie has taken several significant leaps towards this. For a start, it’s completely rebuilt core systems, deploying a real-time banking engine as well as Cassandra database management technology.

“We’ve embraced open source technology to deliver as fast as possible, and we’ve changed the culture of the IT team to see open source as something that can increase innovation and speed,” Uguina says.

Simultaneously, Macquarie has been working on culture, reducing team sizes and bringing in cross-functional expertise so smaller groups are more empowered to make decisions. Instead of having isolated silos, teams are cross-functional and enabled to deliver any new product or concept from end-to-end.

Physically, the office has also been given a shake-up, with activity-based working and more open, flexible work environments introduced. “Daily scrums and other collaborative ways of working change things too,” Uguina says.

“The traditional approach is to say what you want, deliver your vision to the IT team, then they come back in 16 months with everything. But 16 months is a long time in the market, and we’ll probably have a couple of new iPhones and technologies by then. You’re losing a lot of opportunities.”

Yammer has been rolled out as an internal collaboration tool, and Uguina says everyone, including the CEO, is regularly sharing vision and strategy via the platform. In addition, technology, business, legal and compliance are now a single team.

“Previously, we’d want to do something, spend three months with functional requirements, and everything would need to be on paper to sign off,” Uguina says. “Now, IT, business, legal, compliance and risk are in it from the beginning, receiving the same pitch. They have bought into the same big picture and vision, and they know where we expect to be in three months, six months and two years.”

Feedback from customers

Another part of the cultural transformation required to embrace a digital ecosystem has been learning that failure is an option, Uguina says. This is being made possible by placing an emphasis on iteration using internal and customer co-creation and feedback.

“We have all embraced an MVP [minimum viable product] approach, where it’s better to launch something to market that’s not the product with every single feature but instead the product we think is good enough to be in the market,” he says. “Then what we expect is to receive feedback from customers. From that point, we’ll be building the product customers really want.”

One big step forward was extending Macquarie’s beta environment, historically only open to staff, to early adopter customers. The Brainsourcing initiative encourages customers to provide feedback by giving them early access to features long before the wider market can consume them. Marketing, product owners and the business are then reviewing this feedback on a daily basis, ensuring changes customers request are fed into the daily improvement cycle.

“The whole team is working in pure Agile methodology, and some teams are moving products into beta daily. This, for a bank, is science fiction,” Uguina claims.

“For the first time in my life, I’m working for a company that’s extremely transparent about the things we see. When we launch a new feature, we have good or bad feedback from internal employees, who are the first clients to enjoy and experience a product. We have 3000 people working in BFS, so that’s 1900 potential users of our digital products.

“And if we deliver something that pisses off 1900 people internally, why would we think it’ll work with customers externally?”

Up next: How Macquarie Bank is defining digital innovation through customer needs

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Defining digital using customer pain points

When it comes to what’s actually driving new digital features, products and services, Uguina says the focus is on removing friction points customers experience when engaging with a bank. To do this, Macquarie has upped investment into machine learning, predictive analytics and has a growing team of data scientists working to utilise data.

One such pain point is searching transactions to understand purchasing history. “If I want to know how much money I have spent on groceries over the past year, I have three accounts and two cards, I need to check those five things, download all the data to a spreadsheet, then work out which is groceries versus something else. That makes no sense,” Uguina says.

Using search-how-you-speak, based on natural language search, customers can now search their transactions and query purchase history to find out how much they spent on groceries in the past month, or the last trip to Spain.

“We shouldn’t be teaching any single customer how to work with a bank. You as a customer should be interacting with a bank in the same way you do with anything in your life,” Uguina claims.

Another customer bugbear is personalised financial management, and Uguina points out consumers want to look at what amount of money they’ve spent in a month, and be able to limit or better manage expenditure. This also means it’s vital transactions are logged and accessible in real time.

“Security is another important thing in a customer’s life, so every time you use your card, you can receive a push alert to your phone in real time,” he says. “As a customer, I shouldn’t be accessing the bank every single day to know what is happening – you should be able to alert me when something unusual is happening.”

As an example, if a customer is spending $3 every day on a coffee, they probably don’t need to be notified each time this transaction takes place, Uguina says.

“In the same way, we are working on a model where if you are receiving your payroll every single month, I probably don’t need to tell you that; I should tell you when you haven’t received it,” he explains. “Or if you’ve been spending a certain amount on electricity every quarter but the next bill is double, you should know about it.

“With really strong algorithms, machine learning and predictive analytics, where we are heading is to an approach where you don’t need to access the bank, because if the bank is not alerting you to anything, nothing unusual is happening. Or we should be able to predict that your gas invoice is going to be between $250 - $300, and if it’s $450, we can alert you so you’re aware something is going to be more expensive than normal.

“This integration of digital channels and this peace of mind and trust that the bank is taking care of you is the big picture for us. That’s what success looks like for us in two years.”

It’s clear consumers love a personalised experience. But Uguina admits it’s challenging to deliver that humanised experienced through digital channels. “The only way we can create this awesome experience where you feel safe, comfortable and trust what’s happening, is when you’re using the data to provide this experience,” he says.

Uguina notes the current budgeting tool MVP as another example. The tool allows a customer to state their own goal or limit and be supported around it, as well as create ‘what if’ scenarios that can help them with financial saving or expenditure.

“As a bank, we know your spend patterns and what’s going to happen in the future,” he says. “The future model as a bank for customers should be that you know me, I use your products, so in your experience as a bank, how do you think I should limit my expenses?

“For example, you could ask: ‘What if I want to buy a new car?’ The system could then say, ‘well you should reduce the number of times you go to a restaurant every week, because you could save $3000 in one year’. These are the things that make a lot of sense that customers love.”

The chief digital officer role

While Uguina is convinced digital must be at the foundation of business today, he doesn’t believe the chief digital officer role is a transitory one.

“Technology isn’t something that’s static; it’s changing every day. What that means is technology, methodologies and ways of working, and how people behave, changes every day,” he says. “You need someone that is going to be the chief trouble making officer, and someone challenging the company.

“The traditional business needs to be able to decide how the product is going to work. My mission with all is to be sure we’re always with the right mindset and culture in the way we approach the execution and delivery.”

Uguina says having someone focused for one year or three years on digital strategy also suggests there is an end destination that’s achievable. “Digital is the journey… it’s not a thing, it’s a way of doing things, a mindset, an approach and capability of the company,” he says.

The key to being a chief digital officer, meanwhile, is being able to align business and technology.

“You need to be able to use technology with maximum impact to get the best business outcome,” Uguina says. “To be a good CDO, you need to be passionate about technology, be the person that is challenging the company every day, and you need to be ahead of the pack in terms of what’s happening in the market.”

And of course you must strive to embrace speed and agility, Uguina says. “You need to be moving as fast as possible without breaking anything,” he adds.

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