How innovation in financial services can make everyone better off: Q&A with Dame Jayne-Anne Gadhia

We are thrilled to have Dame Jayne-Anne Gadhia join Trade Ledger as an advisor, working directly with our leadership team as we scale the business. We think Jayne-Anne’s long track record of successful innovation in the financial services industry, her experience as CEO and advisor to Salesforce UK make her the perfect fit with our mission and culture. Here, she shares some of her thoughts on those topics with us.

Trade Ledger: You've spent most of your career in financial services. Looking back to where you started, what big changes stand out? 

Jayne-Anne: The two things that immediately come to mind are the role of women in the industry, and attitudes toward innovation.

"The whole financial services ecosystem has been completely transformed during my career."

After I qualified as an accountant, I went to work for an insurance company, Norwich Union, which is now Aviva. As the head of finance for part of their unit trust business, I used to have to go to the board meeting in a very posh formal building in Norwich to get all of the accounts approved. The first time I ever went, surprise, surprise, the chairman thought I was there to take the notes, not to present the case. Also, in this head office building, there were no women's bathrooms. I had to use the gents, with somebody outside the door. 

One of the really positive changes in financial services, and I hope more broadly, is that a woman would no longer turn up and be assumed to be the secretary, or find no bathrooms available. 

Many years later, in the early 2000s, I worked at Royal Bank of Scotland under Fred Goodwin, who was highly respected at the time but unfortunately became notorious during the financial crisis. I remember going on a strategy away day and Fred saying to all of the executive team that there will never be any more innovation in financial services. It's just about borrowing money and saving money, and we’ve got that all figured out.

I was shocked by his comment, but I think the view of lots of banking leaders at the time was that we'd gotten to a point where the system works and why do you need innovation? And then, of course, the financial crisis happened, which was the beginning of innovation on a big scale. Just by those two things, the whole financial services ecosystem has been completely transformed during my career. 

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Trade Ledger: Talk more about some of the effects of the financial crisis.

"I do wonder whether ordinary citizens realise just how close we came to complete financial meltdown. The public may go into a shop in an hour's time and their credit cards won't work"

‍Jayne-Anne: I do wonder whether ordinary citizens realise just how close we got to complete financial meltdown. I don't think I even knew—and I was right in the heart of it—until afterwards. I was sitting in the offices of Goldman Sachs on Fifth Avenue in New York. The office had quite a low window onto the sidewalk, and the gentleman with whom I was meeting said, I remember sitting here during the financial crisis, seeing the feet of all these people walking by and I thought, if only they knew what we're talking about here right now. They may go into a shop in an hour's time and their credit cards won't work. And I thought, wow, we got that close to a financial meltdown. So clearly not everything was working well and there were lots and lots of consequences. 

Two of the big ones that I think are linked is that governance of financial services businesses became much more important. Clever people were no longer allowed to launch whatever products they thought they could make money with. I had a chairman at the time, Sir Brian Pittman, who said to me, people keep on talking about innovative financial instruments, but anything that's got a title of innovative financial instrument on the balance sheet is clearly something that's high risk. I think governance in part means that boards really do understand what the teams are doing, and the risk controls.

I also think the financial services sector took a long, hard look at itself and said, how on earth did we get to this place? We realised that culture was at the heart of it. My experience at the time was that the big financial services companies worldwide were all led by very bright alpha males who knew each other well and wanted to beat each other. The competitive spirit of, I want my bank to be more successful than your bank I think led to some decisions that were too risky. 

We realised that the culture needed to change in order to create a much more effective, sustainable system. I do believe that financial services, as a consequence, has been at the forefront of some of the changes that we've seen since in organisations to avoid this sort of group think. 

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Trade Ledger: You’re perhaps best known for heading up Virgin Bank and also for developing the Virgin One account. Can you talk about the impact of launching those innovations into the culture you’ve described?

Jayne-Anne: Virgin Money was a very small bank at the time the financial crisis unfolded. We bought Northern Rock, one of the institutions that had really been through the mill during the financial crisis. As we combined the banks and became much bigger, we had to be really clear on what we wanted our culture to be. 

The way in which we articulated that culture was that we wanted to make everyone better off. That became EBO, Everyone Better Off. Initially I had imagined it would be a marketing campaign, but it became our corporate ambition. It enabled people to make the right decisions in the organisation without having to constantly refer back for guidance. Most of the people really got behind it, and those that thought, oh, this is all a bit ridiculous, voluntarily left.

It was super powerful. When I compared Virgin Money with any of the other big UK retail banks, we didn't have better products, we didn't have better processes. But I'd like to think we had a better culture and that helped us achieve more.

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Trade Ledger: Isn't the goal of all financial services to make everyone better off? Or just certain people?

"I wonder whether sometimes, the focus can be too much on making shareholders better off. My view, rightly or wrongly, is that if you treat your customers right it will mean that your bottom line is better and the shareholders will be happy."

Jayne-Anne: Exactly. I wonder whether sometimes, the focus can be too much on making shareholders better off. My view, rightly or wrongly, is that if you treat your customers right it will mean that your bottom line is better and the shareholders will be happy. But when making shareholders happy means cutting corners, then you don't have happy customers and then you won't have happy shareholders.

The Virgin One account was a very strong innovation that came out of that customer focus. In the UK the vast majority of homeowners own their home directly through borrowing, through a mortgage from their bank or building society. That creates obviously very large debt. At the time, interest on that debt accrued monthly, in 12 big chunks of cost.

What we said was, wouldn't it be great if you could take a line of credit on your home the way that you do with the mortgage, but bring it together with your savings accounts and your checking account. You pay in monthly and you do your very best at all times to reduce the balance on your mortgage so that you reduce the amount of interest that you pay. In order to do that effectively, you need to have interest being calculated every day so that you would get the benefit of whatever you pay in daily. 

People absolutely loved it. We became the 10th biggest mortgage provider in the UK from scratch. The thing I think that I'm most proud of in that innovation is that people younger than me will never have known now that mortgage interest was not calculated daily. Every provider in the UK has moved to daily mortgage interest which has saved customers certainly hundreds of millions of pounds if not billions of pounds as a consequence. 

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Trade Ledger: Take that Fred Goodwin.

Jayne-Anne: Exactly. 

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Trade Ledger: You took a brief hiatus from Financial Services to be CEO at Salesforce UK and are now an advisor to the company. What have you learned in that industry that you’re bringing to your work as an advisor and non-executive director in financial services?

Jayne-Anne: After wrapping up my role at Virgin Money, I decided with some of the team I’d worked with there that we would create a new type of financial services company off the back of open banking, which enables customers to access their banking data for their own benefit. We built a business called Snoop that analysed customers’ banking data, and we were able to tell them where they could save money. For example, we could see where their mortgage was and determine whether they should go to a different mortgage provider. We could see where they were shopping and whether it was cheaper to buy the same basket at Sainsbury's or Tesco. We sold that business to Vanquis Bank, last summer. 

"So understanding how to use software as a service in order to support what organisations want to do with their own business is what I really love. I think that that's a real direct route and straight line to Trade Ledger."

Having got into the fintech space, a head hunter rang me and said, would you be interested in joining Salesforce's advisory board? I thought to myself, well, this would be a really brilliant way to meet people in the tech world. I was absolutely fascinated at how Marc Benioff and the team there have built such a significant and sustainable SaaS business. The real magic dust seems to be that Salesforce operates a relatively consistent system, but in the hands of the customers, it can become exactly what their customers need it to be. Being able to support so many different businesses with the same software is incredible. So understanding how to use software as a service in order to support what organisations want to do with their own business is what I really love. I think that that's a real direct route and straight line to Trade Ledger.

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Trade Ledger: What made Trade Ledger resonate with you? 

"I've reached a point in my career where I only want to work with people I like, who are doing interesting things. I met Martin and Kurt and was impressed with their clarity of vision. They're trying to do a good thing. They're trying to build a business with a strong culture. And I've got skills and experience I hope, that are relevant to what they're doing. "

‍Jayne-Anne: Two things–the product and the team. Being able to provide banks and financial services companies with a system that enables them to provide finance more readily and more safely seems to me to be of itself a really good thing to do. SMEs are crying out for this sort of service and it seems very difficult for the big banks to do so at the moment. Being able to find a way through software that they haven't got to develop in-house in order to manage that could unlock something really significant in the economy worldwide. 

But it's actually all about the people. I've reached a point in my career where I only want to work with people I like, who are doing interesting things, where I might be able to help a bit. I met Martin and Kurt and was impressed with their clarity of vision. They're trying to do a good thing. They're trying to build a business with a strong culture. And I've got skills and experience I hope, that are relevant to what they're doing. 

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