The Original Challenger

1. First UK Bank without Branches
2. More CMA #1's than any other bank
3. Text message banking

1. One of Britains most loved and respected brands
2. A reputation for amazing customer service
3. High levels of customer loyalty
   1. %age of long serving customers
   2. Relatively low levels of customer attrition
4. Customers already love our digital services (CMA + NPS)

1. Still growing
2. Strong grip of operating costs
3. Impressive record of continuous customer growth
4. Resilient profitability against an industry trend of falling profits
5. Backed by one of the world's largest banks

1. Entry critera already defined
   1. App-Only
   2. Functional entry barrier

      Annotations:

      • There are certain capabilities we must have to compete
   3. Fast Moving
   4. 'Not A Bank'
   5. Need a proposition that differentiates us
   6. A narrative we don't control
2. Creating differentiation and cut through
   1. It's not easy
      1. Existing banks have a poor track record
         1. Bo (NatWest) Closed
            1. Loot Failed
         2. B (NAB) very slow growth and low customer numbers
      2. Even NeoBanks fail too
         1. N26 withdraws from UK
         2. Fidor withdraws from UK
      3. Already crowded, over 30 neo banks
      4. We lack brand awareness anyway
         1. Good and Bad?
         2. Opportunity for confusion?
            1. Some will think we're a startup, others won't
         3. Gives us more flex than other banks
   2. Existing market is Suprisingly homogenous in both approach and capability
      1. Starling, Monzo, first-mover advantage?
         1. Brand awareness
            1. Eponymous?
         2. Association with App-Only bank
         3. Hard to compete with
      2. Feature footprint very similar across players
   3. What is customer perception of this market? What is it for?
      1. Do consumers just see them as App-Only banks?
      2. Unlikely to see as complex as we do
      3. Discretionary spend management?
3. We're at our best when we're leading

Annotations:

• Analogy of changing a fan belt while the engine is running... used often in banks trying to spin up their own new-bank internally.

1. Existing business to run and manage
   1. Ensuring sustainability
      1. Existing Customers needs and expectations
         1. Avoiding alienation
      2. Income gives us permission to play
2. Finding space to build the new business
   1. Conflicting priorities
      1. Funding
      2. Resources
   2. conflicting culture and mindsets
      1. Mothership approach to oversight, funding and management
   3. Continuous demands
      1. Regulatory commitments remain
   4. Side of desk
3. Critical importance of transition plan
   1. Journey just as important as desinated.

1. Used predominantly for Spend Management
2. Debatable CA primacy
3. Limited product portfolios

1. Culture
2. Technology
3. Proposition
4. Transformation Management
5. Op Model

1. Endgame as important as target vision
   1. Transition to new business mode?
   2. Sell / Dispose
   3. Absorb new capabilities

      Annotations:

      • Once the group's innovation and feature capability has been advanced by firstdirect, do we just go back to BAU?
   4. Time limits on the experiment
2. What is meant by "Challenge the Challenger".
   1. Drive high volume customer growth
   2. Adopt low cost model
   3. Defence mechanism - understand market
   4. Genuine belief we can create a profitable niche
      1. Brand research
         1. We play in areas of trust no other brand does
      2. We've done it before
   5. Seed Innovation across the group
   6. How is success measured?

1. We've tried and failed at accelerated transformation before
   1. How do we learn from this experience?
      1. Comfort with failure is culturally important for a new bank
   2. Have we learnt from the past?
   3. Org Design
      1. Culture
         1. Do we think in the right way?
            1. Do we prioritise the right things?
            2. Do we make the right decisions?
            3. Do we have the right experience?
               1. Gap in Digital and Transformation skills
            4. Do we create sustainable change?
         2. Very phone-centric
            1. Focus on channel migration from phone - not-a-phone-bank
               1. Focus should be on creating a digital bank
      2. Operating model
         1. Do we have the right org structure?
         2. Do we have the right skills?
            1. Do we have enough of them
         3. failed to modernise teams and skills
            1. Clear signs we have failed to transform skills and op model as the business has changed
               1. A number of identified key 'hygiene' skills missing
                  1. UX
                  2. Copy
                  3. CRM
   4. Technology
   5. Did we really fail?
      1. Failure is not learning from the mistakes made
      2. Culture dictated we'd failed when we hadn't?
         1. A failure to adopt the right mind set

1. Legacy Architecture
   1. Environments
   2. Not built for speed
2. Delivery Teams
3. Order book funding
   1. Too Rigid
      1. Does not facilitate agile working
   2. Too many compromises
      1. Prioritised across multiple territories
         1. Does not provide adequate sense of fundign security
      2. Prioritised aross multiple business problem
         1. No overarching strategy for transform funding
            1. Funding not ring-fenced to achieve transformational goals
            2. Reg funding always ring-fenced
               1. Does this rreflect elative importances of transformational change
   3. Too long term
   4. Blended rate card makes everything expensive
      1. All quotes in mulitples of 1 Man Year = $180k
   5. Too Slow
      1. Fundng amounts not confirmed until months into financial year