Title: Cultural changes required to be still standing in the aftermath of the Digital Disruption caused by Open Banking and PSD2
The UK and European Regulators have a goal of increasing competition in the banking market around PCA, BCA, SME Loans and Payments. They are effecting this through the CMA Remedies and PSD2 which impose near-term dates for Banks to expose their data and services publicly through APIs. New entrants and Third Party Providers, will seek to gain revenues and market share from established players using the APIs that banks have to provide at no cost. This will fundamentally change the competitive environment and banks need to have a strategy to compete in this digital market. This will require a change to their current people, process and technology which are not aligned to this dynamic digital market. Many banks will end up as a commoditised utility and only one or two will be the big winners in this wave of disruption. This talk will cover the open organisational culture Red Hat believes is needed to be on that (very) short list of digital winners.
Global CIO Banking Summit - Workshop Cultural Changes to Survive Digital Disruption
Cultural changes required to still be standing in
the aftermath of the Digital Disruption caused by
Open Banking and PSD2
Global CIO Banking Summit 2017 - Workshop 1
Director, Red Hat Open Innovation Labs - EMEA
7th Feb 2017
TO BE THE CATALYST IN COMMUNITIES OF
CUSTOMERS, CONTRIBUTORS AND PARTNERS.
CREATING BETTER TECHNOLOGY
THE OPEN SOURCE WAY
RED HAT’S MISSION STATEMENT
In San Francisco Uber has 3x
revenue of the entire prior taxi
and limousine industry!
Without owning a single room
Airbnb has more rooms on
offer than some of the largest
hotel groups in the world!
Top Kickstarters raise tens of
millions of dollars from tens of
thousands of individual
backers, amounts of capital
that once required top-tier
The WTF Economy
The Open Banking Standard is driven by the
Open Bank Working Group (OBWG), set up in
September 2015 as part of an initiative of UK
HM Treasury to explore how data could be
used to help people transact, save, borrow,
lend and invest their money
This standard will guide how open banking
data should be created, shared and used by its
owners and those who access it
PSD2 is a data and technology driven Directive
that aims to drive increased competition,
innovation and transparency across the
European payments market, while also
enhancing the security of internet payments
and account access. (November 2015)
Euro Banking Association (EBA) Consultation
Paper on RTS on SCA & common and secure
communication under PSD2
It’s Not Limited to Silicon Valley
Disruption in Banking - Open Banking will offer tremendous potential for Banks and Financial
Institutions to innovate at pace, create new revenue streams and disrupt the disruptors
“We need banking but we
don’t need banks anymore.
Do you think someday we
can open bank account or
ask for loan without
physically have to come to
Bill Gates Antony Jenkins, former CEO of
“We will see massive
pressure on incumbent
banks, which will struggle to
technologies at the same
pace as their new rivals.
That will make it
increasingly challenging for
them to deliver the returns
and profitability that their
Taavet Hinrikus co-founder of
“The entire banking
industry can be disrupted
for the better and bricks
and mortar banks are
heading for tough times"
"Every vertical in banking is
a huge opportunity,"
What if Google, Apple, Facebook or Amazon
became a bank?
Because something is happening here
But you don’t know what it is
Do you, Mister Jones?
Bob Dylan, Ballad Of A Thin Man
Error #1: Not Establishing a Great Enough Sense of Urgency
Error #2: Not Creating a Powerful Enough Guiding Coalition
Error #3: Lacking a Vision
Error #4: Under Communicating the Vision by a Factor of Ten
Error #5: Not Removing Obstacles to the New Vision
Error #6: Not Systematically Planning For and Creating Short-term Wins
Error #7: Declaring Victory Too Soon
Error #8: Not Anchoring Changes in the Corporation’s Culture
HBR: Leading Change - Why Transformation
By John P. Kotter
OPEN SOURCE IS NOT JUST CODE; IT’S CULTURE
(both access and
the ability to act)
are solved faster
The Open Organisation
"an organization that engages participative
communities both inside and out—responds to
opportunities more quickly, has access to
resources and talent outside the organization,
and inspires, motivates, and empowers people
at all levels to act with accountability."
- Jim Whitehurst, CEO of Red Hat
● Greater agility, as members are more capable of working toward goals in unison and
with shared vision;
● Faster innovation, as ideas from both inside and outside the organization receive more
equitable consideration and rapid experimentation, and;
● Increased engagement, as members clearly see connections between their particular
activities and an organization's overarching values, mission, and spirit.
But openness is fluid. Openness is multifaceted. Openness is contested.
Openness Can Lead to
Truly open organizations embody them all—and they connect them in
powerful and productive ways
The Basic Conditions for Openness
● Autonomy — Our desire to be self directed. It increases
engagement over compliance.
● Mastery — The urge to get better skills.
● Purpose — The desire to do something that has meaning and is
important. Businesses that only focus on profits without valuing
purpose will end up with poor customer service and unhappy
What Do We Want?
From the book “Drive: The Surprising Truth About What Motivates Us” by Daniel Pink
● Decentralised & Autonomous - top down goal setting but bottom up decision making
● Two Pizza Teams - The basic building block of your organisation
● Automation & Self Service
○ Automation is a basic requirement, need to reduce lead times
○ Self Service de-couples teams, allows autonomy
● APIs & Platform Theory
○ De-couple teams, build a virtuous cycle in your ecosystem
○ Think Platforms and become a student of Platform Theory
Keys & Principles
How do I move faster?
Decentralise to increase autonomy and to move faster
Hierarchical or Flat?
You can’t dodge Conway’s Law so work in
“organizations which design systems ... are constrained to produce designs which are
copies of the communication structures of these organizations”
— M. Conway
If you can't feed a team with two pizzas, it's too large.
— Jeff Bezos
 It’s worth reading The Science Behind Why Jeff Bezos’s Two-Pizza Team Rule Works
Automation & Self Service -
Reduces lead time, not just cycle times
What we have learnt from our participation in open source communities is that it’s not enough
to be agile, you must be adaptable. Lead times are one good metric to help you measure your
adaptability through automation and self service
“Optionality” - Give yourself options - Release the value of additional optional investment
opportunities available only after having made an initial investment
● Private IaaS / Public Cloud - Optionality for your basic infrastructure
● PaaS - Optionality for your code
● APIs - Optionality for your business
Create Digital Platforms
● People don’t resist change - we are an evolving adaptive species
● People are not stupid (overall)
● They will resist loss of power
● Their resistance is smart response to dumb method!
● The more resistance you experience the more likely it is that your methods suck!
● Instead of fighting resistance to change, watch out for common mistakes in
● There are symptoms of struggle with adaption and the new that should not be confused
with resistance to the change itself
● Keep going, change has no beginning or end just constant adaptation
If you are experiencing resistance...
It’s not me it's you (or your method)!
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