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Barclays' Global Acceleration by John Varley 08/30/07 a strategy…
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Created: Wed Aug 29 16:17:38 2007
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Barclays' Global Acceleration
by John Varley
08/30/07
a strategy+business exclusive
© 2007 Booz Allen Hamilton Inc. All rights reserved.
strategy+business enews
Barclays' Global Acceleration
How one global bank successfully transformed itself.
1
by John Varley
I n 2003, the management of Barclays Bank
resolved to put our foot on the accelerator of per-
formance. There were two main reasons. We saw
an opportunity to create faster growth in shareholder
value. And we thought it was important to develop our
These results did not take place by accident. They
represent the successful execution of that 2003 decision
to transform Barclays from a company with disparate
operations in many different countries to a unified
global enterprise, one that now serves 27 million peo-
capabilities around the world so that, when customers ple. We were not certain we would succeed, and we
chose a bank in the markets in which we operate, they don't take our continuing success for granted. But we
would think of Barclays first. have learned, in the past four years, some universal
This spring, we announced our results for 2006. principles that allow us to keep moving forward.
They represented the best performance in the bank's · Setting a Vision: To "Earn, Invest, and Grow."
300-year history. Net profits rose 35 percent, to At many times in its long history, Barclays has been a
£7,136 million (about US$13 million), and earnings formidable force in international banking. And
and dividends per share went up 32 percent and 17 Barclays is an iconic brand. But in recent years,
percent, respectively. We have made an emphatic turn- because our portfolio was excessively concentrated in
around in our flagship United Kingdom retail banking the United Kingdom, the fortunes of our shareholders
business, and we have sustained high performance lev- were dependent on the vicissitudes of doing business
els in our investment banking business (called Barclays in one country. This also made us curiously lacking in
Capital) and our commercial banking activity. self-confidence, relative to the Barclays of 30 or 40
Approximately 50 percent of profits now come from years before. So we set ourselves the task of increasing
outside the U.K., compared with 25 percent three the rate of profit growth by diversifying our business
years ago. We are also well positioned to deliver further base, strengthening our retail and commercial banking
growth, both organic and through acquisition, in the activities outside the U.K., and expanding such global
years ahead. For example, Barclays' 2005 acquisition of businesses as Barclays Capital, Barclays Global
the South African bank Absa has made it a market Investors (asset management), Barclays Wealth (private
leader on the African continent. We regularly evaluate banking), and Barclaycard (credit cards, loans, and
other possible combinations, big and small. insurance products).
strategy+business enews
John Varley
(editors@strategy-business.com)
is group chief executive of
Barclays Bank PLC. His previous
roles have included finance
director, chief executive of retail
financial services, and chairman
of the asset management
division. He is a member of the
International Advisory Panel of
the Monetary Authority of
Singapore and a nonexecutive
director of AstraZeneca PLC.
2
The new vision has been easy to articulate but quite easier for customers to do more business with us.
difficult to accomplish. We know that our shareholders For example, the Open Plan program, which we
will not accept a profit growth holiday while we invest have now made available in many markets, allows cus-
for future growth. To grow and maintain profitability tomers to reduce their mortgage costs by offsetting
simultaneously, we rely on the fundamental health of them against the money they hold in savings and
the Barclays franchise: its standing in the minds of checking accounts. The typical savings -- about £700
employees, in the communities where it operates, and, per year for every £100,000 borrowed -- reduces our
most of all, among customers. Furthermore, all our margins, but it leads to a big increase in the number of
employees understand that they are expected to focus products people hold.
their efforts on two primary tasks. The first is serving Other examples include our investments in a single
customers brilliantly. The second is complying with online interface to enable customers to oversee their
legal and regulatory requirements, and maintaining the credit card accounts, mortgages, investments, and bank
financial controls that preserve our license to do busi- accounts together. Extracting interstitial value requires
ness and justify the trust that our customers place in us. great management skill and a streamlined organization.
· Adopting a Universal Banking Model. Barclays We have halved the size of the Barclays executive com-
serves customers who range from individual mortgage mittee (to five members) and decentralized operations
holders in Manchester, England, to corporations man- so that many more decisions are made locally.
aging their risks by means of complex derivatives in dif- · Creating Focused Points of Strategic Control
ferent tax jurisdictions around the world. Increasingly, and Direction. In 2004, we combined the investment
however, customers cannot be served in silos; for banking, asset management, and wealth management
instance, our mortgage business in Spain is facilitated groups into one "cluster" (IBIM). This has allowed the
by our ability, through Barclays Capital, to securitize team leading IBIM (under Robert Diamond, president
that risk to investors. So we seek opportunities to sell of Barclays) more latitude in reaching out to today's
and deliver services across internal boundaries. We pro- financial-services customers, who increasingly need all
mote synergies both within our two main divisions -- three services together. We can now more easily use the
global retail and commercial banking (GRCB) and know-how developed in asset management and invest-
investment banking and investment management ment banking to invigorate the wealth business; wealthy
(IBIM) -- and between them. When Frits Seegers, clients, who were previously served by a traditional
chief executive of GRCB, first looked at our customer stockbroker model, now have access to the same com-
base, he said, "I can't believe how narrow our relation- prehensive advice and innovative products developed by
ship is with them." Customers who thought of us as Barclays for institutional clients.
their bank often had only one or two accounts with us, The other cluster (GRCB), led by Frits Seegers,
and the rest with competitors. Today, the "universal addresses the increasingly homogeneous needs of retail
banking" principle continually pushes us to make it consumers and businesses around the world.
strategy+business enews
· Executing a People-Based Agenda. We focus
attention on the husbandry of talent because we recog-
nize that the quality of our advice and innovation is the
primary source of our value to customers. If you're the
CFO of a listed company with a defined-benefit pen-
sion scheme that is heavily in deficit, then you want spe-
cialist -- not generalist -- advice; you need the best
advisors in the market. We seek to create a good balance
of talent development from within the organization and
selective recruitment from outside. The group presi-
dent's board responsibilities include championing talent
and making sure that Barclays continues to deliver on an
increasingly challenging human resources agenda.
3 · Putting Customer Relationships First.
Customers base their decision to choose a particular
financial-services provider on the relationship they have
with that provider. We thus need to know: Do cus-
tomers find us valuable, congenial, and dependable? Do
we make it easy for them to maintain multiple lines of
business with us? We measure customer service in a vari-
ety of ways: surveys of customers, employees, and con-
sumers; "mystery shopper" visits to retail banks;
complaint volume and market share metrics; league
table standings; and tracking of community engage-
ment programs. Because we make decisions based on
these measurements, they affect the behavior of every
employee. It's an article of faith with us that whatever
one's job is in Barclays, we must all be in touch, direct-
ly or indirectly, with customers. And that applies to a
group chief executive like myself just as it does to every-
one else within the organization.
The Barclays journey began with a single strategic
step, but it soon came to rely on the actions of thou-
sands of employees. We have seen firsthand that when
people at all levels follow a customer-focused ethic, with
the support of the corporate structure and metrics, it
can raise the metabolic rate of the entire company. Only
then can we accelerate the three main components of
our vision: to earn, invest, and grow. +
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