What the banking sector can learn from the HMRC COVID-19 response

When Covid-19 is finally brought under control, some sectors will be remembered for the way they stepped up and assumed responsibility during the crisis. Healthcare is the most obvious, but they are not alone.

Supermarkets and councils also played a critical role in preventing the country from sliding into meltdown. As did the Chancellor of the Exchequer and Her Majesty’s Revenue and Customs (HMRC).

The Coronavirus Job Retention Scheme, Self Employment Income Support Scheme, Statutory Sick Pay and Eat Out to Help Out were initiatives launched quickly and decisively by the government. However, they were only made possible by the swift, accurate deployment of HMRC’s digital services built to access them.

In contrast, British banks have received their fair share of criticism for their response during the pandemic. Dealing with huge security issues and legacy systems, many within the banks struggled to react. At a time when the whole world was learning to pivot, the bank’s approach was slow and seemingly reluctant. They were dealt a severe blow when the government had to intervene with its 100 percent ‘bounce back’ loan guarantees. 

The key question now is, where can traditional banks look to learn lessons from the Covid-19 response? Simply looking at the fintech that is coming in and challenging the market is not useful. The problems traditional institutions are facing are much more complex. 

A need for greater openness to digital collaboration

The HMRC response would not have been possible without the huge effort of the people who made it happen. But the real story lies with management, culture and years of investment in people, governance, and technology. 

As a forward-thinking and customer-focused UK government department, HMRC is committed to ‘making tax digital’. In a similar position to most of the traditional financial sector, it felt like a shift to ‘digital first’ was a huge undertaking. But HMRC realised it needed to happen.

When HMRC started their transformation in 2013, they started small. They also brought in a team from Equal Experts, a consultancy they recognised could bring the technical know-how and culture of Continuous Delivery.

Over the years, this openness to third-party vendors, combined with a strong HMRC based team, has seen them move from a single team and a single site, to a multi-centre, multi disciplinary team. And through Continuous Delivery they have been able to build one of the most forward-thinking digital outputs in government.

Post Covid-19, a key challenge for banks will be to really collaborate with third-party vendors and allow their internal capabilities and culture to be challenged and improved so they can respond more quickly to emergencies.  

Creating the right culture and embracing an agile, can-do mindset

Of course, in addition to the technical process, a project of this scale and complexity warrants an equally sophisticated delivery approach. Unpicking where the barriers to progress in the banks may be, it is clear that having technology solutions in place does not automatically change behaviour. 

During their digital transformation, the HMRC teams combined a wide range of skills and expertise. This included managers who were able to understand and make decisions about what to do in business situations and experts who were adept at cutting through bureaucratic red tape. 

Adopting agile ways of working and strengthening the DevOps culture within banks is a clear way forward, but to do this there needs to be a closer link between commercial decision-makers and tech thought leaders. 

There is evidence to show an absence of senior management buy-in as being a major barrier to the adoption of newer digital approaches. It’s hard to imagine that any bank would have been able to retool in the way HMRC has during the Covid-19 pandemic. 

So what can the banking sector take from this?

It appears that financial institutions have no choice but to digitally transform business, operational, and technology functions to compete in the digital economy. However, this needs to be done sensitively and with a level of maturity that fosters a culture of openness from the top down. 

The changes at HMRC have meant a shift to agile culture, and a move of pre-existing services to a cloud-based Multi-channel Digital Tax Platform (MDTP). This has taken time, patience, collaboration, and a step-by-step approach. 

Because of this ongoing investment in culture, in a matter of days, the HMRC team had gone from being a mainly office-based workforce to having 55,000 people working from home. It allowed them to design, deliver, and implement a whole new system, capable of dealing with huge spikes in traffic. In a matter of weeks. 

This is the kind of agile response many banks will envy, but if they start now, they can quite realistically achieve.

Learn more about the HMRC Covid-19 response.