Former Lloyds Banking Group CIO: Your days as a 'fixer' are long gone

Throughout his career, Morteza Mahjour, the former group CIO at the UK's Lloyds Banking Group has faced many tough situations. But according to Mahjour, it comes with the territory.

Mahjour recalls one occasion during his tenure at Lloyds when there were fears in the market that interest rates would drop below zero per cent. The Bank of England sets the rate of lending and at the time, they were sitting near that mark.

“I was sweating it that night…[a drop below zero] would have made it challenging to make our [core] systems accept negative interest rates," he says.

This type of disruption to an IT department is constant with businesses having to deal with incoming policies, customer demands and constant regulatory changes.

Mahjour believes an organisation must ask a fundamental question to survive market disruption.

"How does [your organisation], regardless of the industry banking or otherwise, survive the massive disruption that’s happening right now? For some of the folks that I speak to around business transformation…it’s a means to an end. People define digital transformation differently," he says.

Mahjour is now a part-time advisor to c-suite executives and often poses the above question to his audience. It’s a question that he asked himself in his previous role as CIO at Lloyds between 2014 and 2018 and earlier as chief information and operations officer at Royal Bank of Canada between 2009 and 2013.

Just when Mahjour thought he was done with work, he took on an opportunity to join Lloyds Banking Group.

“I have been in financial services for more than 30 years,” he said. “I am a true practitioner…I started as a telecommunications analyst infrastructure out of university and then worked my way up to amend the technology and operations for the largest bank in Canada.”

Tech central to business

He believes traditionally people looked to the CIO to fix infrastructure problems but "those days are gone," he says.

“If you truly believe technology is no longer at the back and it's central to the business, then what you need to do in a progressive organisation is to make these issues owned by the organisation,” he says.

“My approach to Lloyds was that the IT [department] doesn’t own the architecture…this belongs to the transformation project group and incorporates various business units. We put all the issues into the centre and then collectively decide on the priority of fixing them. Then, as a result, they will divide and conquer.”

Mahjour believes IT will play a vital role across the Australian financial sector as it prepares for The Consumer Data Right legislation (open banking) in July this year as well as upcoming regulatory changes set out by the Banking Royal Commission, which mirrors the UK’s open banking regulation and banking commission.

“In a regulated environment, banks had a stronghold on payments – but that’s gone, because [this market] is now open. Banks had a stronghold on distribution, but that no longer matters, because distribution is gone. One of the other strongholds, customer data – now that’s all open,” he says.

“As a result, banks need to ask themselves if they really have the right business operating model for the core capabilities to survive all these changes.”

They also need to understand what customers expectations are based on their day-to-day experiences.

“Customers, whether they are in Australia, the UK, South Africa or North America, are changing. They no longer want to go to a branch in the same way they did two years ago,” said Mahjour.

“In my opinion, those two pressures are going to continue to go up one way. Then you have macroeconomics -- if you look at what happened to us in the UK, a few years ago we were close to negative interest rates, and literally had to pay you to lend you money.”

Getting the board…on board

Although Mahjour doesn’t see the same “level of crisis” in Australia, he says the incoming changes mean boards will now have a different conversation where the talk will be around improving customer experience as well as determining risk and being compliant.

“In my opinion, there is another way to [deal with] these issues. That’s by looking at how to transform my business, digitally or otherwise, to both manage risk and [upgrade] customer experience,” he said.

“There’s massive disruption with individual impact. At Lloyd's, it started with prices and we had to survive…our approach to get ourselves back on [track].

“We were owned by the government, we had to pay all of our debt, we paid five per cent dividend, we took a customer journey approach, we improved out NPS and revenue. But we also learned an awful lot.”

Mahjour advises that organisations should undertake technology projects in chunks over the next three to five years. Making big transformational changes at once is quite risk in a highly regulated environment and "the change agenda would be big," he says.

“You’ve got to do it incrementally… learn and take,” he says. “You really have to look at your capabilities. Many organisations looking at these changes will say they feel like a technology company because the implications of technology on a changing business model [are] tremendous.”

The downside to all of this change, Mahjour says, is that companies are starting to see gaps in their legacy infrastructure, risk and security architectures. This means it's important to start including the rest of the c-suite in the technology conversation.

“[This] then means you are all working only towards common goals,” he said. “As a CIO, I actually made sure that my compensation was based on net performer scores. Coming together and have a shared accountability and responsibility will only benefit the customer.”

Tools of the trade

It was important for Mahjour to get board approval on major decisions including a 10-year, £1.3 billion cloud services agreement Lloyds signed with IBM in 2017. Under the deal, Big Blue is providing dedicated cloud offerings, hosted in data centres in the UK run by IBM and Lloyds, as well as management of application migration services to the cloud.

“As you go down this path of transformation, you need to acknowledge whether or not you have the right skills to carry speed and pace – which is of importance,” he says. “Certainly we brought on critical strategic partners on board because we don’t have the skills. I had to also upscale my own organisation and sometimes you just can’t afford to have scale at the right pace.”

Lloyds was able to cut the deal with IBM because Mahjour and his team had implemented cloud in a 'sandbox' to prove that it was secure and it would work well.

“We did a cloud implementation strategy, migrating our apps to [IBM’s] platform,” he said. Then as a result of that, we got some of the service into IBM. This is where you try to also create cost efficiency in your organisation, and upscale," he says.

Mahjour also ensured that all the appropriate procedures completed due to the need for Lloyds to be 'very transparent' in a regulated market that is considered vital to the UK's economy. At the time, Lloyds also partnered with Publicis Sapient for digital transformation.

This type of scrutiny and pressure is part and parcel of the job, he says.

“In addition to what we deal with on a day to day basis, strategies are changing, ways of working are changing, and companies are making critical decisions at a faster pace. I think the way to balance that pressure is to make sure the CIO isn’t the only role inside the organisation that carries that [load],” he said.

“I think this is where people need to truly understand that technology and business has become one and the same. It's the actual executive committee, that’s making the decisions because every decision these days is just not [just about] technology.”

In Mahjour’s view, technology has to deliver value.

“There are certain things that I need to do as a CIO. These include managing, risk, technology, debts and regulations - that's my job,” he says.

“Beyond that, in improving architecture and improving everything else that we do... I think you truly have to get yourself to a place where all technology decisions have to deliver customer value…or else why are you doing this?”