When Dame Janye-Anne Gadhia sold Virgin Money to CYBG and ended her 11-year stint as its chief executive in 2018, she had an idea.
“As I and a number of my colleagues were thinking about what to do next, we originally thought ‘Let’s build a new bank’,” she tells City A.M.
“But someone said banking’s difficult, it requires lots and lots of capital. Why don’t we see whether we can use our banking expertise more effectively by working with open banking?”
The result was Snoop, a fintech providing customers with “personalised insights” by using AI and open banking data to help them manage their finances.
The term, more broadly called open finance, generally refers to financial institutions sharing and using data for the creation of new products to improve customer service. Experts have estimated that open finance and personal data mobility could add upwards of £30.5bn to the UK’s GDP.
“Snoop was much more successful than we ever expected,” Dame Gadhia says. “We weren’t sure how many people would be happy for us to access their banking data on their behalf, and the answer is that people are very happy with that.”
However, she raises an issue. “Customers very much said to us ‘We would like a banking product to match this budgeting. If you can tell us we need to borrow something for the week ahead, give us the opportunity to do that.’”
Dame Gadhia gives this demand as the reason for selling Snoop to specialist bank Vanquis last July. “Snoop now will be able to not only give people that insight through open banking, but also be able to offer them products that match that budgeting capability,” she says.
Since the acquisition, Dame Gadhia has doubled down on open banking. Last month, she was appointed as chair of Ozone API, a fintech which helps companies and regulators deploy open banking technology.
“During all of that time my team and I worked on Snoop, it became clear how powerful open banking is,” she says. “This is a brilliant step for me in being able to take that detailed consumer knowledge of the UK into the technical platform and the global development that Ozone is building.”
The appointment adds to her wide-ranging roster of boardroom posts, including being the lead non-executive of HMRC, chair of online fund manager Moneyfarm and a senior independent director at art institution Tate.
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The UK’s wider fintech sector is in a tight spot. Valuations peaked in 2021 after the Covid-19 pandemic and have since tumbled. The industry is now experiencing a wave of consolidation as funding costs rise due to higher interest rates.
“We were all shaking our heads at those ridiculously high valuations,” Dame Gadhia says. “So in some ways, it’s not money lost – it’s a rightsizing of what the opportunity may have been.”
She adds: “The thing I’ve always said about fintech is I think it’s really important to make sure that the people that are running the business understand the ‘fin’ as much as the ‘tech’.
“Some of the businesses that have started off in a very tech sort of way will grow to a point where they need that financial experience to help them to go to the next level. And so I think that will be driving some of the consolidation.”
Big banks under pressure
The banking landscape has changed dramatically in the six years since Dame Gadhia stepped down as CEO of the country’s sixth-biggest high-street lender.
A boom in digital-only challengers, weak share prices and high numbers of customer complaints have put big banks under pressure, while they scramble to cut costs and transition away from branch-based business models.
“I think technology remains an issue for a number of banks with legacy systems. With some of the smaller banks, it costs a humongous amount of money in order to invest in real digital transformation,” Dame Gadhia says.
“So I would see that as something that probably increases the gulf a little bit between the big banks and the smaller banks.”
Virgin Money, now under CEO David Duffy, is on a mission to reduce costs as it transitions to online banking. The lender cut 150 jobs last quarter and has warned there could be more to come.
Dame Gadhia says banks should treat branch closures “more and more carefully”, adding: “Banking can be very simple and can give retail customers really good service with straightforward, transparent simplicity that’s delivered well.
“I think the problem in the last five years has been that banks have, perhaps in a low-interest rate environment where it’s been harder to make money, started to focus on more complex products and they’ve cut back on customer service.”
Last year saw the sector rocked by outrage over “debanking”, with a surge in official complaints over account closures. The issue persists, with the Treasury Committee last week raising questions over banks’ justifications for closing more than 140,000 business accounts in 2023.
“I am shocked at the debanking scandals that we’re hearing about,” Dame Gadhia says. “Certainly when I was at Virgin Money, it would never ever have crossed my mind or my team’s mind that we wouldn’t be an objective handler of people who adhered to our terms and conditions.
“I think that that is something that the banking industry has got to get right.”
Sexism in the City
Diversity and inclusion were central to Dame Gadhia’s leadership of Virgin Money, where she narrowed the firm’s gender pay gap and committed to a 50-50 gender balance in the bank’s top jobs.
The latter principle became enshrined in the government’s Women in Finance Charter, which came on the back of a 2016 review led by Dame Gadhia into female representation in the City.
She acknowledges that firms have “moved forward” on representation in the last eight years, with more than 400 firms signing the charter. However, Dame Gadhia says the diversity of views within the boardroom is still lacking.
“The thing that I’m less pleased about and worries me post-Covid is when I go and talk to CEOs of FTSE companies, the majority of which are still white males, often what they’ll say is ‘Diversity is really important to me, look at my board. But they have to behave like me.’ And that is a real limitation.”
The Treasury Committee has also raised concerns as part of its ongoing Sexism in the City inquiry, which has heard reports of widespread misogyny, pay gaps and inadequate HR across the Square Mile.
The Financial Conduct Authority in January launched a probe into how City firms deal with reports of sexual harassment and bullying after the limited progress of industry-led efforts, asking insurers, banks and brokers for data on non-financial misconduct in their workplaces.
Dame Gadhia acknowledges that a culture of misogyny still persists beneath the surface.
She says: “I was at a breakfast and met someone who had been an investment banker for 25 years and had stepped back, and she said ‘I just realised that it was just too hard as a woman to keep fighting the misogyny in my investment bank.’
“The problem that many women will still tell you is that ‘As a strong woman I want to have my view heard, and when I make my view heard men will tell me I’m emotional, difficult, a troublemaker.’ You have to be pretty resilient to keep on going through that.”