Jes Staley, head of multinational investment bank and financial services firm Barclays, spoke at the ULI Europe Conference in London, sharing his recent experiences addressing shifting financial regulations and the evolving opportunity presented by new technologies.
Staley spent 34 years at JP Morgan Chase, eventually becoming CEO, before a stint leading a hedge fund landed him the top job at Barclays. No matter how impressive his career to that point, nothing could have prepared him for the challenges awaiting him when he joined Barclays in 2015 as group chief executive officer.
At that time, Barclays was facing a host of difficulties, not least of which was an investigation into the London Inter-bank Offered Rate (LIBOR) and foreign exchange fixing. In the United States, Barclays would pay $2 billion fine in 2018 tied to mortgage-backed securities and the bank’s role in the 2008 global financial meltdown. Combined with other issues, the bank was facing liabilities totaling more than the global value of the bank. As Staley put it, “The strategy was in tatters. It wasn’t the easiest place to walk into.”
Today, Barclays is in a very different place, thanks in no small part to Staley’s leadership. In a few short years, the bank has recapitalized, undergone a huge restructuring—including the financial separation of the consumer and small-business banking in the United Kingdom from its investment banking—and confronted the impact of Brexit, among many other challenges. Asked whether he now gets any sleep, Staley responded, “Every now and then.”
Staley recalled the immediate aftermath of the Brexit referendum, when he and his executives realized they had to act quickly, he said. Presciently, they took the view that a proper decision on the nature of a U.K. departure from the European Union would not be made until the beginning of 2019 and that they therefore had to work on the basis of a worst-case scenario—from Barclays’s perspective, a no-deal exit from the European Union.
“We had a subsidiary in Ireland, so we flew over and talked to the central bank,” Staley said. “We then flew on to other countries across Europe to talk about relicensing. The result is that today we can do everything we can do . . . in Europe [no matter what happens with Brexit]. We are also now the largest bank in Ireland.”
If dealing with the potential fallout from the Brexit vote was demanding on Staley’s time, it paled in comparison with the financial separation, or “ring-fencing,” of the U.K. consumer and small business bank—a move mandated in the wake of the 2008 global financial crisis to ensure that the bank’s other operations could not threaten the economy in the event of another crisis.
The ring-fencing also necessitated physically separating the Barclays tech platforms. “We had to shut the computer systems down on a Saturday and bring them back up on a Sunday,” he said. “If it hadn’t worked, Monday would have been a bank holiday in the U.K. Fortunately, there was only one Sunday that was really scary.”
Separating the consumer and small business bank from the rest of Barclays’s global business was a stressful maneuver, but it did not dampen Staley’s enthusiasm for the potential of digital technology to transform the company’s business. Indeed, he spoke with passion about Barclays’s use of technology, frequently digging into his breast pocket and waving his smartphone at the audience.
Staley said 7.5 million people use the Barclays mobile app, the average customer using it every day and for a duration of seven minutes. That provides a huge amount of data and an opportunity for one of the United Kingdom’s biggest mortgage lenders to provide detailed information to potential homebuyers, particularly millennials, he said.
“We can customize the banners on the app and have built a whole program in order to work with millennials to help them buy their first piece of real estate,” Staley said. By analyzing users’ income and location requirements, among other data points, the app can give consumers a day-by-day update on how close they are to being able to secure a mortgage with Barclays, he said.
Staley also committed Barclays to maintaining a substantial branch network, saying many branches remain very profitable, in particular those with a substantial customer base of small businesses. He noted that though Barclays was the first bank to have an ATM in a branch, today the bank employs more human tellers and they are better paid, even when adjusted for inflation.
“If you go into a Barclays branch, you will see a person standing by an ATM,” he said. “They are there to help people who are struggling. . . . Soon, we will only be banking on mobiles or tablets, but tellers will still be there to help older people, especially, learn the digital language.”
Staley’s core message was that technology is now at the heart of Barclays’s operation. Whereas once the company’s most valued employees were its investment bankers, today the digital experts are its most highly valued commodity. “We now have 28,000 people managing tech,” he said. “Our engineers and developers are absolutely critical.”