Plenty to smile about

Head was poached by smile from his role as the co-founder and finance director of Prudential’s internet bank in February – but admits he has fond memories of his time there.

He even admits part of him is still with the Prudential product, something that will surprise no one who read the interview he gave to Accountancy Age 12 months ago during his tenure there.

‘It was a wrench to leave after 12 years and sometimes I forget I am not there anymore. I find myself talking about egg in the first person present tense,’ says the married father of three.

‘There are many people over there that I know and love, but that is all in the past now’.

With that sort of sentiment, no wonder his exit agreement when leaving egg stated that he could not return to recruit his former colleagues.

So, with such an obvious affinity with the company, why did he leave?

‘I basically became frustrated with the way things were going at egg. I wanted to take the venture further than it was allowed to go. There comes a point when you have to put up, shut up or leave, so that’s what I did,’ he says.

‘However, that said, I want and hope egg will be a success. If it is, it looks so much better on my CV! What smile gives me however, is egg but taken to another level,’ he says.

e-banking veteran

In what is still a fledgling sector, Head, a Coopers & Lybrand-trained accountant, finds himself almost a veteran of the e-banking world. It is the virtual world’s increased customer focus that continues to motivate him.

‘The essential difference between internet banking and the traditional model is that the customer has more control of their financial affairs. The traditional big banks talk about the relationship they have with their customers as if they are married, yet still treat their customers with an almost dictatorial attitude.

‘Our aim as an internet bank is to make our customers’ lives easier and this is partially done by understanding that they are the dominant part of our relationship’.

It could be said – indeed it has been – Head is like a breath of fresh air in the traditionally stuffy world of banking. He could even be described as a crusader looking to change the face of banking forever. He describes banks merely as ‘storers of value’ and a place which enables transactions to be carried out.

Aggregators and communities are what Head believes the internet is all about. And he believes real-time democracy is possible via the web.

‘I really do not like the big fat banks with their plush offices and shag pile carpets. Why do customers have to pay over the odds for this, for the inflated salaries and massive shareholder returns? We need to fight back.

‘Many banks have few ethics. Features such as headline interest rates, charge structures and the rest of it all serve to confuse the customer.

What we are trying to be is straight up. After all it is bad enough working for a bank, so we are trying to make sure our staff and customers are proud of us.

‘We adhere to the ethical policy the Co-op is known for,’ he adds.

Charging crisis

But as any venture capitalist will tell, bluster is often not matched by delivery in the online world. It would seem that this is not the case with Head. When the recent cashpoint charge crisis hit the industry, many banks attempted to charge customers £2 to withdraw money from machines.

Only smile, parent company Co-op and Nationwide categorically ruled out introducing the charge at the height of the issue. ‘It is morally repugnant to charge that sort of fee when it costs maybe 20 or 30p to service a withdrawal,’ he remarks.

It would appear the no nonsense message has got through to employees and customers – of which there are well over 200,000 – alike. In a recent survey by the Co-operative, some 89% of employees were either proud or very proud to work for the company. That figure was even higher for smile.

When Head moved to his latest online operation, one of the first things he did was to find out whether employees wanted to adopt a dress-down policy. The reply that came back was that they didn’t want to wear suits.

They were so committed that what they wanted – and this may surprise some outsiders – was to wear casual clothing complete with the smile branding.

As the bank recently celebrated its first birthday, its recognition was further confirmed after it topped the ‘best web-based bank’ survey put together by independent rating service, Gomez. It is the second time it has won the award.

Gomez ranks and provides a quarterly comment on the pros and cons of online banks and other online financial services. Indeed it would appear it is gathering an impressive trophy cabinet after already winning a raft of awards including ‘Best Internet Technology Team’ and a variety customer service related awards.

Secrets of success

Head reckons he knows the secret of a successful online business.

‘Too many internet ventures are tempted to rush into the next sexy thing and do not stop to bolt down what they are already offering,’ he says.

‘The basics are essential. It is easy to recruit customers, but it keeping them that is the real challenge.

‘The internet revolution is merely three or five per cent started so far. And what is great from my point of view is that the leaders do not have all the answers yet. If something comes up our attitude is “let’s get the answer”, rather than in other industries, where managers become dysfunctional because half the time they pretend to know all the answers.

‘It was once said that you were more likely to get divorced than change your bank. That is not the case today and we have to guard against that.

Change will not stop here, according to Head. ‘We are in the process of drawing up our strategic plan for the next five years – core to that we will continue to make life a little better and try to make our customers money go a little bit further – and certainly not look to stiff them,’ he adds.

As part of this process smile will certainly be looking to include the reconfiguration of their systems in a bid to drive down the time it takes to download customer information, but without reducing the security surrounding their site.

And no conversation about the internet these days – especially not when it comes to online banking – can avoid the vexed question of security.

Internet errors

Indeed on the very day that Accountancy Age meets Bob Head, there are reports from Switzerland that a Swiss bank has posted details of some of its clients’ bank accounts on the internet in error.

With the sort of supreme irony that these sorts of affairs seem unable to escape, among those customers was a certain Roger Moore, the man who played the suavest of James Bonds in the 1970s and 1980s.

But Head is neither shaken nor stirred by the question of security. He points to the fact that smile is the only financial services company to be awarded the BS 779 security kitemark.

‘I can’t tell you how much it has hurt us after some of the experiences at the other banks,’ he adds.

‘But we are going to take security to another level so people really are clear that smile is secure.’

If Head gets his way, smile will change the very core of the relationship between a customer and his or her bank. He wants nothing less than to change a collective frown to a smile.


  • The one right answer does not exist.
  • If it does exist, something new will invalidate it shortly.
  • If you think your idea is new then you are deluded. Success is rapid, quality execution.
  • You need good and committed people who can learn on the job together.
  • Beware of the person who says they know the answer – they don’t (you can spot them easily because they talk in technical jargon and quote statistics).
  • Without a sympathetic owner/parent/shareholder (and wife in my case) – forget it.
  • Plan out what to do but do it very quickly. Your analysis (if you can do it) will get rapidly out of date.
  • Things change too quickly. Set out no more than a nine-month strategy outside general principles (for example, get customers, make them sticky and sell).
  • Get off the bleeding edge if you can and get to proven technologies.
  • Be open to change the model you are using at any time.
  • Business rules haven’t changed but the playing field and players have changed. Watch out for naive e-people who are often young, arrogant, innovative and inexperienced. This is a great opportunity for ‘wrinklies’.
  • Be open to new ideas – don’t kill the seedlings – you don’t know whether it is a flower or a weed until they grow a little.
  • You need a big space for imagination and at the same time there is a need for process and rigour. It is difficult to get the right balance.
  • Don’t look back too hard – rapid change and experimentation causes waste.
  • Accept leadership can come from anywhere. The management team at egg rejected the name several times but there was a persistent supporter, Clive Wing, who repeatedly disobeyed instructions and kept putting it back into consumer research until he proved his case. Great leadership from Clive.
  • Allow people to be different. Tolerate the crazy organisation (if it can move fast and is flexible).
  • Ensure there is some order – watch the housekeeping/business as usual. There is a danger that the business becomes like five-year-old boys playing football – they are never more than ten feet from the action and the rest of the pitch gets ignored.
  • Launch bluff is not an option. Complete, honest disclosure is required.
  • Recognise there are different forms of failure. Someone who is negligent, lazy, political etc and fails is a real failure. Someone who reaches for the stars, works hard, is a team player etc, if they fail then it is not a failure, they will have taken the world forward. Celebrate this sort of failure.
  • Keep a focus on costs – consultants over #1,000 a day are not worth it.
  • Do everything to get customer service awesome and then everything to get it beyond awesome.
  • Be lucky.

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