Presiding Officer, First Minister, Ministers, MSPs, distinguished guests - good morning and thank you for inviting me here today. I am a proud Kiwi, but my family and I are also proud of our Scottish ancestry. So having the opportunity to speak in the chamber of the national parliament is a great privilege for me.
In fact, having been in the UK for over a year now, and having spent a lot of time in Scotland, I’ve been inspired to look into joining the clan Ewan, the home clan for us McEwans. The Ewans are of Irish/Scottish ancestry, descended from Irish Kings who came to Scotland around 500 AD. I’m led to believe that some of the McEwan clan joined the Campbells, but with five McDonalds on these benches, it was suggested that I shouldn’t dwell on the connection. Other McEwans ran off and became outlaws and rogues, which may be the link between my family and Australia……
Suffice to say that I have a great affinity with this country, and a very real appreciation of the role the Royal Bank of Scotland should be playing within it.
Alongside the politicians, public bodies, trade bodies, local authorities and private businesses who are in this chamber today, the Royal Bank of Scotland is part of the fabric of Scottish business and the Scottish economy. Everyone here will have their view on what happened at RBS, and what we should be doing to put that right. We know we have a debt to repay, and nowhere is that more keenly felt than here. I hope what I say today will give you confidence in our plans.
You find me in front of you at the start of my time as CEO. I arrive with a very specific goal – to make us a great bank for our customers. Much of my career has been spent building organisations known for having a fixation on customers. And my experience tells me that success for a bank depends on two things. A strong financial position that is beyond question, and a reputation for great customer service and deep connectivity with the society the bank supports, and is in turn supported by. These form the basis of any bank’s reputation.
Over the next few minutes I want to explain how I think we are addressing the first requirement, as well as setting out the barriers we will have to overcome before we can claim to have addressed the second.
What I won’t do today is set out all the answers. Plans for a fundamental change in the way we do business is something my leadership team and I are undertaking as we speak, and which we will be saying more about in the next few months.
So let’s talk about backing Scotland and Britain.
For the best part of the last three centuries the Royal Bank of Scotland has helped shape modern Scotland, although it’s fair to say that over the last few years the bank’s valued role in the nation’s history has been badly undermined.
Of course, it’s not just us - the whole sector has faced criticism. It’s become clear in recent years that banks were taking their customers for granted. And now the consequences of our conduct are catching up with us.
This morning I was at Scottish Financial Enterprise, meeting with asset managers, insurance firms and many other institutions from across the Scottish financial sector. I would like to say - they do not deserve to be tarnished with what happened in banking.
And nor do we think of ourselves as just like any other bank. We’re not. RBS was saved by the taxpayer – at enormous expense. We must never put this country in that position again. There can be no compromise on the safety and soundness my predecessor Stephen Hester worked so hard to regain following the 2008 crisis.
So it’s pretty clear to me that we have a very special obligation to the people of this country. Savers, borrowers, homeowners, small businesses, large companies - they need to be able to rely on us because we had to rely on them.
Recently, we have taken steps to strengthen our capital position and deal with our bad assets to give us the platform we need to offer that support. This included accelerating the divestment of our US bank, Citizens, as well as the creation of RBS Capital Resolution which will oversee the run down of our worst performing assets. The focus on what is a very small proportion of our total assets was taking up far too much of our energy and attention. These distractions kept us looking backwards. Now we can move forwards by making these changes and redirecting our focus on customers.
And the changes we want to make are timely ones. Through our customers we’re getting a clear view that the economy has turned for the better. They are hiring more people. More of them are asking us about borrowing to invest in their businesses than at any point in the last five years. And our experience is confirmed by the official figures: the UK is growing above its long-run trend and there are more people in work than ever before.
Many household budgets have still to reflect the improvement in the macro data, but if surveys of firms and individuals are a useful guide to the future, confidence is improving and next year will be better than this year. So it feels like our economy is out of the mire - although it’s probably too soon to say it’s out of the woods.
We want to support our customers as they see economic opportunities emerging for them. But the reality is, right now we don’t always live up to that responsibility.
We recently commissioned former Bank of England deputy governor Sir Andrew Large to carry out an independent review of our business lending. When he published his initial findings at the beginning of November, it didn’t make for very comfortable reading. Right now, RBS is the UK’s biggest lender to SMEs, but that’s not the right way to think about our responsibility - we want to be the best for customer service in the SME market.
We are already committed to taking steps around things like cutting the time taken to decide on loan applications and having more credit decisions taken locally or by sector specialists. And I’m pleased to say we’ll be extending our existing approach of writing out to customers outlining the additional borrowing we can offer them based on their business performance. In the first wave we made an additional £4bn available. We will now extend that to £10bn.
But implementing the findings of Sir Andrew’s report won’t be enough on its own.
We are going to have to make some fundamental changes, and as I mentioned, a review of our entire business is currently underway. I know what you’re thinking – it’s just the latest 5 year plan and another big restructuring. But there’s a crucial difference – this review will focus on something we’ve not been focused on for a very long time: customers.
When the bank went through its long expansionary phase more than a decade ago, the fixation was on investment banking, and a global footprint – RBS wanted to be the biggest, and that’s what we poured our efforts into. Our ambitions……not the ambitions of our customers.
Then when that failed, attention had to switch to how we could save ourselves from collapse and get back to health. Our conversations became about capital ratios, risk and bad assets. Our problems……not our customers’ problems.
We are now in a sound financial position which enables us to end that fixation on ourselves. We need a new – or should I say renewed - focus on our customers. Customers' problems…. customers’ needs…. Customers’ ambitions.
That’s why events like this are so important to me, and to the bank. To properly focus on customers, we need to understand the views and concerns of all the different kinds of organisations that are in this chamber, and make sure we can fulfil your needs.
By becoming a great bank for customers, we will take the first and most important step towards repaying the people of this country.
I firmly believe our responsibility is also our opportunity.
Let me read to you a quote from our 1953 staff handbook. It says;
‘'The primary purpose of the Bank is to serve its customers; and, to the customer, the particular member of Staff with whom they actually deal, and to whom they talk, is, in a very real sense, “the Bank”. It is therefore highly important that each member of Staff should, at all times, render prompt, courteous and efficient service to the Bank’s customers, and ensure that they receive the kind of personal treatment which will create a feeling of friendliness and mutual confidence.”
Back then, services may have been much more limited but they understood the link between how customers felt about their dealings with the bank, and the strength of the business. A good reputation was something to be cherished. The stark reality is that sixty years ago we had a focus on customers that we can no longer claim to possess. It’s that connection which the banking sector has lost.
You can see the difference it makes when we do manage to show some recognition of our obligations. We were one of the first banks to offer mortgages under the government’s Help to Buy Scheme. In its first month, we helped over 1000 customers with their application and we’re already seeing some move into their first home.
Here in Scotland, we are also offering wider support to the communities where our customers live and set up their businesses. Since 1988 we’ve been supporters of the Princes Trust in Scotland – helping to give young people from challenging backgrounds a chance to start their own business. Our commitment to nurturing new enterprise is also evident in the work we’re doing with an organisation called E-Spark, which I know many of you will be familiar with. They already have three ‘hatcheries’ in Ayrshire, Glasgow and Edinburgh where early stage businesses get a chance to flourish. Along with some funding, we’re supplying mentors and business advice to support the great work they are doing, and we’re looking at what more we can do to support them.
From the Scottish Government to Scottish Enterprise, the Chambers of Commerce, Councils and many others, there is an impressive commitment to growing new business in Scotland. I know that my colleagues in the bank have formed some good relationships with their counterparts in those organisations, which they will have my support to build on and strengthen.
Supporting the next generation of aspiring businessmen and women is more than just philanthropy for us – it’s common sense. Our responsibility is also our opportunity. Helping individuals and businesses to succeed is not just good for them it should be good for us too. By delivering a great bank for customers, more people will want to do business with us, more often, and that should lead to better returns, and one day, a chance for the government to sell its shares to private investors.
But taking the bank back to the private sector is not why I am in this job. My ambition is to create a great bank for customers.
As we spend the next few months considering how to re-shape our business we will also have to recognise that we are dealing with some seismic shifts in the customer landscape. If we want to become a great customer bank, we have to confront those shifts.
So let’s consider the changing customer landscape.
Let me ask you a question. How long do you think it should take someone to open and access a new bank account?......... Two days?..... One day?...... An hour?..... For us, at the moment, from the time you walk into a branch, until when your card arrives in the post, we’re probably looking at 4-5 days. Young people used to the instant responses they get in the digital world can’t understand why it should take any more than 5 minutes, and they’re right.
Expectations have changed. Consumers are becoming less and less willing to tolerate service that doesn’t meet their needs. Consumer empowerment is also being supported and accelerated by rapid technological advances. We no longer dictate how customers interact with us – they are dictating that, quite rightly.
Take our mobile app. During the morning rush hour huge numbers of customers are logging-in, checking their balances and making transfers. By the end of next year, we expect to have more than 4 million users. A few weeks back we reached over 1 billion log-ins. At the same time, we see less and less activity in our branches. Since 2010, branch transactions are down by almost 30%.
As we consider the radical changes we will have to make, we need to prepare for a future based on being there for customers on their terms. I know some MSPs have already visited our innovation centre in Edinburgh where we design and test new technologies. Later today I am looking forward to taking the First Minister around the facility and showing him how we are modernising the way we serve our customers.
I can announce today that the Royal Bank of Scotland will be investing £30 million on deploying a new generation of NCR cash
machines which will give customers a much broader range of everyday banking facilities where and when they want them. The
team at NCR’s Dundee Centre of Excellence has led NCR’s involvement, working closely with our own technology team to ensure that we deliver state-of the-art equipment to convenient locations for our customers the length and breadth of the UK.
Whether it’s our mobile app, or a self-service machine in a train station, shopping mall or a remote village Post Office, we need to start offering smarter solutions that make it simple and easy for people to do their banking in new and different ways.
We should be looking at putting 24 hour self-service centres in places like Waverley station which 50,000 people pass through each day and which can address the vast majority of their day to day banking needs.
Then instead of answering balance enquiries, branches can be the place where you go to discuss your mortgage, your new business plan, or the times when you’re facing some financial difficulties. Customers meeting with knowledgeable branch staff and having much more valuable conversations about the things we can do to support them.
We need to spend the coming months designing a bank that can offer services that are quicker to use and more relevant to modern life.
So while I regard the advice on customer care set out in that 1953 staff hand-book as priceless and timeless - I am not nostalgic about banking. We need to harness the new found power of the consumer, embrace the technologies that are enabling it and make ourselves simple and easy to do business with.
Let me draw to a conclusion.
In a moment, the First Minister will give the Scottish Government view on the current issues and challenges facing business and the economy. I look forward to listening to him, and hearing from the other party leaders I will be meeting during the course of the day. I am sure we all share the aim of a vibrant and growing Scottish economy, with a restored and vibrant Royal Bank of Scotland playing its full part.
I hope you leave here this morning with a sense of the kind of bank we want to become. I know others will be looking at what this all means for when the bank can be returned to the private sector, but that is not what is in my mind. I am here to create a great bank for customers. That’s the best way for us to meet the unique obligations we have to a country which saved us in 2008. We need to become a bank that was worth saving.
If we can become a great bank again for customers then some of the other things people look at - whether our people and our customers can take pride in their association with us; whether we are fulfilling our role in the community; whether we can provide attractive returns to investors - those things will follow.
The review of our business over the next few months will lead to some significant changes. When it comes to that time, you may not agree with all steps we decide to take, but I hope that you have some sense today that our intentions are the right ones. By far the most significant change we will make is to become a real customer bank.
That is our responsibility. It is also our opportunity. And our future depends on it.
Thank you.
