David Holton takes Peter Ranscombe behind the scenes at Scottish Widows’ innovation laboratory. And there’s not a test tube or Bunsen burner in sight.
Few brands scream “traditional” like Scottish Widows, the insurance and pensions company that traces its roots back to a coffee house in Edinburgh in 1812, when the idea was born for “a general fund for securing provisions to widows, sisters and other females”. From the block type face of its logo through to Amber Martinez playing the fourth incarnation of “the widow” in its television and print advertising, there’s something reassuringly familiar about the financial services firm.
That’s what makes the company’s “innovation lab” so exciting. Squirreled away in the bowels of a concrete-and-glass eyesore office block in Edinburgh, a team of about 140 people are dragging the company’s digital technology into the 21st century.
It’s a big project. Parent company Lloyds Banking Group has invested £80m in its “digital transformation” programme, which is “looking at embedding digital capability across Scottish Widows’ corporate pensions”.
In a nutshell, the lab is responsible for giving clients access to their pensions via smartphones and tablet computers, revolutionising retirement savings in the same way that mobile banking apps have transformed the way in which customers interact with their current and savings accounts. Instead of receiving a 13-page annual statement, users will be able to see how much money they have in their pension pot, in which funds their cash is invested and how much more they will need to save to secure the standard of living they expect in their retirement.
This type of technology is truly revolutionary for the pensions market and feels a bit like someone’s plonked a BMW i8 hybrid sportscar on the starting grid alongside a line-up of E-type Jaguars. Yet the software – which was launched over the summer – is just the tip of the iceberg.
Behind the scenes, the lab has also created a back-office software system that makes it far easier for employers or their advisors to manage their employees’ pensions. Uploading monthly information about payments has gone from being a 22-day process to one that can be completed in a single day.
Spearheading this push into the future is David Holton. His wider day-job is as director of corporate “propositions”, pensions and investments at Scottish Widows but, within minutes of meeting him, it’s clear that his passion lies in the lab.
Despite sometimes sounding like he’s swallowed a management training manual – with buzzwords like “agile pathways”, “customer-centred” and “team huddles” peppering his conversation as he leads the way on a tour through the lab – once he gets into the swing of things and starts speaking from his heart, few listeners could be left in any doubt that Holton is a man on a mission. And, as corny as it sounds, that mission is to make it as easy as possible for employees to manage their pensions.
Each wall of the lab is covered in posters, post-it notes and whiteboards that tell the story of how a customer uses the new technology and how the underlying software works – the “customer journey”. Comments from clients during the testing phases have guided the team on which parts of the process need to be improved and in what order.
For the development of such a hi-tech product, the approach feels distinctly old-fashioned, like a scene from a 1980s television series – and has perhaps created more than one sleepless night for any fire safety officer who’s seen the number of small yellow paper squares flapping about on the walls. Yet Holton explains that the whiteboards and the post-it notes and the print-outs of customer feedback are all part of the “culture” he wanted to create in the lab.
Instead of sitting behind computer screens all the time, members of the team can stand and point to the work that needs to be done, helping them to prioritise their tasks and to see how their efforts fit into the wider picture.
“I wanted everything to be visible,” explains Holton. “Instead of working in silos, I wanted people to see how their work fits into the wider project.
“Instead of it all being linear – do one task, then do the next task, then do the next task – people can spot what needs to be done in what order to make the experience better for our customers. That’s also one of the advantages of having the whole team on a single site.
“When I was setting up the project, I was shown the open-plan office where we’d be based – it was empty, there were ceiling tiles missing and it hadn’t been used in ages, but I thought it was perfect because it meant we could have everyone working together in the same place. People work better together when they understand how their job fits into the bigger picture.
“I’ve banned hierarchies and grades from the lab. Everyone needs to feel like they can contribute instead of getting tied up in a management chain.”
Giving an example, Holton points to one side of the room where members of staff are answering phone calls from clients. If a customer spots a problem with the software or website then all the call handler needs to do is walk across to the other side of the office to tell one of the coders.
If it’s an easy problem to fix and fits into the broader work that’s going on then the coder can work on it straight away. The call handler can sometimes phone the customer back the same day to thank them for pointing out the problem and to explain how it’s been fixed.
“Under the old ways of working, that fault would be reported by the call handler to their supervisor, who would then pass it up the chain,” he says. “It would then come up at a management meeting in a month’s time and be passed onto me in the technical department and then it might be another month before it came up in one of my team’s work schedule.”
Working out the kinks in the new system has been speeded-up, but so was the whole development process. Implementing additional features used to take nine months but has now been cut to seven weeks thanks to more advanced testing software, while accessibility – for people with dyslexia or who need other support – has also been built into the process.
“In the past, it would take 18 months to develop an idea because the process would ‘waterfall’ from the proposition team coming up with the idea to the IT team who would develop it and then the testing team who would test it – then it would need another 18 months of revisions once customers starting using it,” Holton adds.
“When we opened the innovation lab in January 2016, we wanted to cut that time and also integrate the testing into the process. We see failure as a good thing, as something we can learn from – it’s better to spend £10,000 trying something out instead of £3m developing a whole system and then finding it doesn’t work for the customer.”
That “fail fast and fail cheap” attitude is much more akin to the mantra followed by digi-tech companies in Codebase or an Entrepreneurial Spark incubator than it is to the ethos of a 200-year-old financial services business. Computer monitors display the number of customers using the system at any one time, allowing the team to spot any technical problems or issues with capacity before they start to affect clients and in real-time instead of in a report at the end of the month.
As Holton strides off further down the lab, he passes as poster that spells out “F-A-I-L” as “first attempt in learning”. To emphasise the point, there are other pieces of artwork scattered around the office that include quotes from Michael Jordan, Albert Einstein and other famous “failures” about the obstacles they overcame in their careers.
For Lloyds, the proof of the pudding will be in the eating. Around one-third of Widows’ pensions clients are now using the system, with around £100m of money flowing through the platform. Yet customers are now being encouraged to spend less time using the system – just a few clicks to make each process as simple as possible. So, is Lloyds not annoyed that it can’t sell other products – like insurance policies or bank accounts – to clients in banner adverts or pop-ups while they’re on the pensions website?
“I was quite belligerent about that,” admits Holton. “You won’t find any targets about revenue growth or cost cutting on the walls of the lab.
“I want my team focused on making the experience as good as it can be for the customer. Then it’s up to me and my small management team to make sure we hit our targets.
“If customers have a good experience of using the new capability then they will feel more affinity with the brand. That’s when you can start having conversations about how to offer other products or services to them, not when they’re in the middle of managing their pension pot.”
It’s time for the grand unveiling. Holton leads the way into a side room and plugs his iPhone into a massive television, which shows the software working in its full glory, a sneak-peak at the product revealed to the world over the summer. Hailing from Jarrow near Newcastle, Holton studied economics at Durham University. But his interest in technology pre-dates his work in finance.
“Me and my Dad used to build our own computers – they were like Lego kits, with the circuit boards all plugging together,” he remembers. “I joined Logica after university on its graduate training scheme, but the fall-out from the dot.com bubble bursting made me think that I should perhaps focus on using my economics training instead of my interest in technology.
“I moved to the Bank of Scotland graduate scheme and worked my way up through integrated finance and investment banking and on to small business banking. But that interest in technology was always there.”
Who knows where that interest in technology will take Holton next? Perhaps there are wearable devices on the horizon for the widow, as she glances away from measuring her daily steps on her Fitbit to read the latest update from her pension on her iWatch?