Five things businesses can learn from TSB


As the new kid on the banking block TSB has seized the opportunity to do things differently

“In the turbulent times that followed it was easy to think the ideals that Henry Duncan held so dear had been lost forever… But they hadn’t gone; they’d always been here, just waiting to be found.”

So goes the conclusion of a TSB cinema campaign released in September 2013, delivered in the reassuringly dulcet tones of Patrick Stewart and set against heart-warming animation.

At the time cinema-goers could have been forgiven for feeling a tad cynical, however. The country was still reeling from the 2008 banking crisis. TSB itself was the product of the European Commission ordering Lloyds Bank to create a standalone retail bank following the UK bank rescue package.

The founding principle of TSB, formed in 2013 from 4.6 million Lloyds Bank customers and more than £20 billion of Lloyds’ loans and customer deposits, was to offer customers a better service and restore faith in the banking sector by concentrating solely on retail banking. The aim was to put much greater focus on transparency and move away from the short-term profit-making mindset and culture that had led to events such as the PPI mis-selling scandal.

Though those watching the cinema advert might not have felt immediately reassured, it was a vision that Rachel Lock, then-HR director of group corporate functions and group corporate affairs at Lloyds Banking Group, saw the power of straight away when she was asked to be HR director at TSB. “That’s what compelled me after 25 years at Lloyds to say ‘yes please’,” relates Lock. “It was too good an opportunity to miss.”

Cut to 2017 and it’s clear that Lock made the right move. And that TSB is delivering on its aims. Lending has grown by more than 50% since launch to more than £30 billion. And TSB continues to exceed its target of attracting more than 6% of all new and switching bank accounts in the UK. In March 2015 it confirmed a takeover bid by the Spanish banking group Sabadell for £1.7 billion, less than a year after it rejoined the stock market through Lloyds Banking Group’s sale of 50% of its holdings.

The key underpinning factor has been an approach to people practices radically different to that still found in more traditional banking, says Lock. In 2017 TSB was named by Great Places to Work as one of the Best Workplaces in the UK (in the Large 500+ employees category). Ranking at ninth, it was also the only bank recognised in the Sunday Times’ 2017 Best Big Companies to Work For list.

So there is much that longer-established financial services companies – and those in other sectors – might potentially learn from the TSB way of doing things, feels Lock.


Listening to customer feedback when launching TSB, one area came through loud and clear. “What customers said more than anything else was about bankers’ bonuses,” reports Lock. So TSB decided to take the radical step of “stripping out all sales targets”.

Instead the bank launched the TSB Award: a 10% uplift on each employee’s (known as ‘partners’) basic salary, awarded only if the bank and the individual in question perform at the expected standard that year. The award applies to all staff no matter their seniority, including CEO

Paul Pester. And the criteria for earning this is much more geared around the ‘how’ rather than the ‘what’ of performance, explains Lock.

“We call it ‘a world without sales targets’,” she says. “I’m sure people think if they really poke around we’ve still got them somewhere, but we absolutely stripped those out.”

Partners demonstrating the correct ‘how’ have received 12.5% for the last two years thanks to TSB’s better than expected performancein reaching its objectives (the award is capped at 15% of basic annual salary). ‘Pioneers’ – those really going the extra mile – receive double this uplift. “Our two unions Accord and Unite liked the simplicity and transparency of [the new reward system],” comments Lock.

The question that springs to mind, however, is how the populations of the workforce TUPE-d over from Lloyds or joining from more traditional banks – and therefore used to a bonus culture – reacted to such a radically different system. The HR team focused its attention on managing this change within a couple of employee populations in particular, explains Lock. But the fallout was less dramatic than expected.

“Our mortgage advisors were used to having hard and fast targets,” she says. “We lost about half a dozen who went on to other companies with that kind of sales culture. But we didn’t lose many; it soon became apparent this was a much more open operating style that people could work with.”

The most rewarding aspect of the new system for Lock was when long-serving, customer-facing staff working in TSB’s branches found themselves receiving a bonus for the first time. “I’ve had partners that have been in branches for 40 years write to me and say ‘I’ve never had this’,” she says. “And they’ve been modelling those behaviours and have been at the heart of the community for years.

“I am absolutely fascinated as to why big banks haven’t gone down this route [of simplifying pay],” adds Lock. “Previously it was up to line manager discretion – well we haven’t got time for that; that’s just another thing they’d have to do over the Christmas period.”


Measuring people on the ‘how’ rather than on concrete sales targets is much easier than many might imagine, reports Lock. “I think it becomes quite obvious if you have someone not aligned with our values [of being pioneering, responsible, transparent, straightforward and collaborative]; that’s quite easy to spot,” she says.

Delivering customer service in the right way is an important part of performance. A new approach was once again designed to do things differently. “The main part of the ‘how’ is that we put every single one of our partners through the TSB Training,” says Lock. “That’s not customer service training as such; it’s what experience do you expect to get if you go into a branch or use the telephone or when you interact with us digitally? Every partner went on that, including everyone in risk, finance, HR, legal, and on the exec committee.”

The emphasis now is much more on dealing with each customer as an individual, says Lock. “What I’m used to is customer training teaching you to do things on the bank’s terms, not on the customer’s. So having a script rather than thinking ‘what sort of customer do I have in front of me?’” she says.

Performance management where the right behaviours aren’t being displayed is much more open, immediate and effective than in typical banking cultures, says Lock. “If we spot that someone isn’t fitting into the culture and living the values we have very early conversations,” she says. “I came from an environment where folk might have been off track for a couple of years [before someone intervened].

“It was down to lack of management skills. I think people have historically been quite challenged in having those difficult conversations.”


The aim has always been to communicate with all TSB partners openly and honestly. In this way the internal style mirrors TSB’s external comms. “Our tone of voice is very simple,” comments Lock.

CEO Pester set this approach internally right from the start. “Paul set about with an absolutely unique comms style at that time,” reports Lock. “So at the divested branches the script was: ‘what a pity, you’re one of the divested branches…’ But the way Paul described it was ‘you could see this as a disappointment, but come with me, we’re going to build a different kind of bank’.”

Pester now does a fortnightly ‘stand-up’ where he speaks candidly to staff. “We usually get about 600 to 700 lines dialled in because people congregate around phones,” says Lock. “Then every other week Paul will do a video blog of some description. It’s usually on our comms director’s iPhone,

There’s no holding back during such addresses, says Lock – something that can cause the occasional palpitation but that Lock definitely wouldn’t have any other way. “There have been many times where I’ve listened to one of Paul’s stand-ups and thought ‘crikey, let me just phone the unions and tell them that’s out there!’” she says. “I think it’s highly unusual for a bank CEO to talk to all of their partners every two weeks.”

In line with this straightforward style, Pester makes no bones about disclosing his pay packet. “Paul doesn’t have to disclose his pay because we’re not a listed organisation anymore, but he discloses the whole lot,” says Lock, adding the importance of transparent, accessible remuneration reports on executive pay.

“I’ve been through them all [the remuneration reports of other organisations] recently and there are some where I think: how does that work? Everything is written in small print – it’s not in columns and rows – so you’ve got to add it up yourself and try and find out what the CEO actually earns.”

Communication goes both ways at TSB, adds Lock. A key part of this is the bank’s employee Link Group: “That’s made up of partners – any partner in the organisation.They have to apply and be supported by other partners. They meet four times a year and then come and present their findings and opinions to our executive committee… They come along and tell it like it is.”

She adds: “When I look at the corporate governance paper now out there [recommending businesses assign a non-executive director to represent employees, create an employee advisory council or nominate a director from the workforce] we welcome more activity in that area, because we’re already doing that.”

In keeping with an honest, open approach the exec committee isn’t afraid to push back on any employee suggestions that aren’t feasible. This has been the case on staff mortgages. “We’re not having them – because our products are good enough for customers so they’re good enough for us,” says Lock.

Gender pay and flexible working

Given TSB’s passion for transparency, it’s not surprising that it was one of the first banks to publish its gender pay gap before the disclosing deadline of April 2018. “We decided to get ours out there as soon as we could, because why wouldn’t you?” says Lock. “If you know the answer why wouldn’t you?”

She adds: “Ours is 31% but what predominantly drives that is we have a high number of junior partners who are female and work part time. That actually makes your gap broader. You might say: ‘you need more men, or less women in junior customer-serving part-time roles’. But they’re the lifeblood of our organisation and it suits them well.”

TSB is keen to be even more proactive around flexible and remote working – something still not the done thing in some banks, says Lock. “Historically in financial services and banking it’s been about drawing people into an office,” she says. “There will be some places [at TSB] where we won’t be able to do that [offer remote working], such as in some of the branch and contact centre roles. But if you’re in a back office role there should be no reason why you can’t work more flexibly.

“People still need to interact and see each other – that’s very important for people’s overall wellbeing,” Lock adds. “Our new Office 365 desktop migration will mean partners can collaborate over video screens, over Skype, over Yammer… we’ve never had that. So I think we’ve got the much more flexible collaboration stuff going on now.”

Also aiding a gradual migration to a more flexible working culture is a bring-your-own-device policy whereby the internal intranet is being migrated to people’s devices. This is supported by a strong focus on wellbeing. “That’s led from the top,” says Lock. “ I can count on one hand the amount of emails Paul’s ever sent me at the weekend. It’s four.”


Banks adopting agile working cultures as they move into a more technological banking age is critical, says Lock. This will be key to attracting the tech talent needed to meet customers’ ever-more sophisticated and demanding digital needs, she says.

The key to speed to market is the organisation embracing the concept of failing fast – not something financial services are famed for. “When we launched our mobile app the scores weren’t particularly brilliant but they’re now really improving with every release we make,” says Lock. “You could choose to do an 18-month project, get to 100% perfect, and launch it. But by the time you’ve done that someone else would have got there first.

“This is about empowering partners to come up with the ideas and quickly think ‘that didn’t work very well, let’s try something else’,” adds Lock. “It’s enabling our partners to be a bit more creative; that way you find talent you never knew you had.

“If I look at my niece and nephews that’s the way they’re going to work. They won’t work in a very defined parent-child, command and control governance model.”

Among notable achievements in embracing our digital age, Lock cites the fact that TSB was the first bank “to do iris recognition with Samsung”. “Facial recognition is on its way as well,” she adds.

The bank is also currently in the process of migrating all of its IT legacy systems to Sabadell’s own in-house core banking platform. “The average banking legacy platform is made of so many component parts that have been grown and stuck together over many years,” says Lock. “When we migrate we’ll have one version of the truth without lots of connectivity between different systems.

“That gives you a lot more security, more contingency around disaster recovery, and simplicity. More than anything else it gives you the agility to make changes and upgrade your platform and really run the bank in the way you want to. For example being on the Lloyds platform we’ve updated our mobile app probably once every six months. Putting that onto the Sabadell platform we’re now updating it every month.”

Becoming tech-savvy as an organisation doesn’t mean neglecting those less naturally at home with technology and data, however. “We’ve spent a lot of time getting long-serving partners digital-ready,” says Lock. “We recognise them in different ways. So it’s about having a mix of things that appeal to different people.

“As we migrate I’m very confident we can bring in the innovators, but also our long servers who underpin our company.”