e-learning magazine (US) Taking It To The Bank:

How the Royal Bank of Scotland led one of the United Kingdom's first and largest online learning initiatives - and has been able to cash in on the results.

By Kim Kiser

(July, 2002)

Bank takeovers can be bloody affairs, and the sparring over National Westminster (NatWest), the fourth-largest bank in the United Kingdom, was no exception. Vying for the London-based system with a market value of 21.3 billion pounds ($34 billion US), assets of 186 billion pounds ($298 billion US), more than 1,700 branches, and a recent history of poor financial results, were two contenders. In one corner: The Bank of Scotland, the oldest bank in the United Kingdom. In the other: The Royal Bank of Scotland (RBS), a once-sleepy Edinburgh banking system that had been expanding its influence through alliances with a direct marketing company and UK supermarkets.

Round one began in late 1999, with the Bank of Scotland making an opening bid of 21 billion pounds ($34.7 billion) and announcing plans to sell off portions of the business and return the money to shareholders. The two banks duked it out until The Royal Bank purchased NatWest in March 2000 for the same amount but under friendlier circumstances. 'It was a ding-dong battle to the end,' recalls Brian McLaren, head of training and online learning for the Royal Bank of Scotland Group.

Although the battle was mostly fought over cutting costs and shareholders' income, plans to increase efficiencies - including how RBS would retrain NatWest employees - were important to the deal. In its bid for NatWest, RBS detailed plans to roll out to NatWest's branches its Training and Communications Network (TCN), a system of multimedia PCs linked to the company's intranet by ISDN lines and equipped to receive satellite broadcasts from the corporate headquarters. The network would allow RBS staff to instantly communicate with - and reassure - NatWest employees. 'Acquiring a bank means that there will be a hell of a lot of changes to jobs in the branch network,' says McLaren. 'People would feel quickly under threat so we'd be able to tell them what their new roles would be; we also could roll out messages that say, 'We're on your side, we're thinking about you,' says McLaren. 'Bank of Scotland had nothing like this.'

Nor did many other European companies. At the time, a study by IDC showed 25 percent of companies in the United States actively using online learning. A Department for Education and Employment survey showed that only 5 percent of more than 70 private and public organizations in the United Kingdom were doing the same.

The Royal Bank was no stranger to understanding the savings that technology can deliver. Where other banks cut expenses by closing branches, RBS had been able to save by investing in a uniform IT platform that connects the branches to the home office and lets them share data. The bank's human resources development (HRD) staff found that computer-based training could generate savings in the same way. The bank had dabbled in computer-based compliance training since the early 1990s. But it wasn't until late 1995 that the HRD staff began to see its true potential. That was the year the bank changed the way its branches operated by moving from a mainframe back-office IT system to one that is Windows-based. Until then, most of the staff at branch banks did its work behind a large 'bandit screen'. To make banking more customer-friendly, RBS moved many functions out into public areas. That way, a customer service employee could assist customers as they walked into the facility, calling up their account information on a desktop PC.

'It was a big change for thousands of staff who were moving from an old green-screen system to a Windows environment,' says Lars Hyland, account director for Epic Group. Epic, a custom online training development firm in Brighton, East Sussex, built a CD-ROM-based course that taught employees to use the new system. The bank also held brief workshops to introduce branch employees to Windows and using a mouse. Although the CD-ROM-based course cost approximately 250,000 pounds (approximately $400,000 US) to develop, the bank estimates it would have cost more than four times that to train the 15,000 staff in the classroom. 'That switched them on to the possible benefits and made them decide to radically review the way they did training,' Hyland says.

The bank's managers discovered, however, that moving customer service employees outside the glass partition didn't necessarily ensure good customer service. Until then, customer service staff learned their jobs from their supervisors and at one of the bank's four training centers in Edinburgh, Glasgow, London, or Manchester.

Not only was the chalk-and-talk training costly, it was inconsistent. 'The message you got from the four areas was very different,' says McLaren. Because of that, a customer might get conflicting information about how to apply for a loan at branches in London and Edinburgh.

The bank also wanted to change the roles of customer advisers (those responsible for helping customers apply for a loan or open a savings account) and customer service officers (the front-line people who handled phone enquiries and in-person transactions). 'The bank wanted to be more sales-oriented,' says McLaren. In its new role, customer service staff needed to know how to assist customers and how to spot and follow up on new opportunities - a chance to sign customers up for a new credit card, open a savings account, or sell them a loan. The question became how to reinvent those jobs and effectively train 1,150 employees across 650 branches.

But McLaren's group wasn't the only one looking for a better way to communicate with branch employees. For years, the corporate affairs department had been using satellite television broadcasts, prerecorded videos, and newsletters to inform branch employees of new product launches, rate changes, corporate announcements, and job openings. 'There was no consistent way of communicating with all 35,000 employees,' says McLaren.

In the spring of 1998, the director of corporate affairs teamed up with a representative from HRD to build a joint business case for a common training and communications network. 'It was initially lobbied from a corporate affairs perspective,' says McLaren, 'but when questions were asked about the cost and benefit, it was recognised that the training would generate the cost savings required.' The HRD staff compared the 5 million pound ($8 million US) infrastructure and content investment with the cost of operating the bank's training centers, trainees' transportation and lodging, and the lost productivity associated with having employees out of the office for a week in the classroom. 'We were able to show that for every pound spent on infrastructure, training and roll out, there would be a seven-pound saving - or in simple terms, seven times more training,' says McLaren. The bank's board of directors was sold.

In October 1999, RBS began rolling out TCN, which would connect branches to a corporate intranet, deliver and track training online, and provide access to a virtual classroom by rerouting the satellite connection through the workstation instead of the television. As that was happening, staff from the bank's HRD, retail network support, corporate affairs, and IT departments; Epic Group; and Forth Studios, a recording and production company, began producing the courses and selecting a learning management system (LMS) to administrate the training. (See Why Build Rather Than Buy? to learn why the bank decided to build, rather than buy, an LMS.)

Staff members from HRD and retail network support started out by defining exactly what skills customer advisers and customer service officers needed for their revamped jobs - an understanding of compliance and regulatory issues, banking operations, how to deliver good customer service as well as how to identify new opportunities to sell new products and convert those leads to sales. Working with Epic, they developed 40 hours of online training for customer advisers, 65 hours for customer service officers, and, later on, 40 hours for branch managers on topics such as how to manage a staff and distribute the workload.

Hyland says that consultants from Epic tried to make the process as simple as possible. They started by working with subject matter experts to gather materials for the courses, then created a design document that spelled out their strategies for using interaction, the art direction, and the technical aspects of delivery. After all parties signed off on the plan, the Epic team drafted an interactive script that included everything that would appear in the program - screen texts, scripts for audio and video scenes, filenames, and details of all logic and branching. Once the audio, video, graphics and animations were created, the team used a script-to-screen tool in conjunction with authoring software such as Dreamweaver to develop the online course in HTML, DHTML, JavaScript, Java, or ActiveX. 'The skeleton of the course - the text and navigation - is automated,' says Hyland. 'That rapidly improves the robustness of the process and helps us make changes easily.' Because bandwidth was a constraint, Hyland says they built the courses as Web/CD-ROM hybrids, with video and audio segments and simulations stored on CD. The course would run over the Web through the ISDN line and cut to the CD at the appropriate time.

The Royal Bank knew it was embarking not just on a different way of doing training but on a major cultural change. Previously, training meant more than just learning new aspects of the job. It meant travelling to a mansion-like facility and being entertained for up to a week.

The question became: how could the bank get their employees to accept training without those perks? To grease the wheels for change, the director for retail banking threw his support behind the initiative. His message explaining the reasons for the online training appeared in videos, letters and internal newsletters. Branch managers also attended virtual classroom sessions to learn how to coach and support trainees.

The HRD staff didn't abandon the classroom. McLaren and his team decided to mix online and face-to-face training. Customer service staff learn the basics online and in virtual classroom sessions, then go to a regional training center or outside facility to practice skills such as interviewing customers. Now classroom training that used to take five days takes three.

A few months after RBS began to inroduce the online courses to branch employees, the bank purchased NatWest. That meant McLaren's team had to shift their attention to installing TCN in NatWest branches and repackaging the courses for those employees. It also meant initiating an even larger cultural change. Although the RBS staff had been exposed to computer-based training before TCN, the NatWest employees knew nothing but stand-up training. 'When we acquired NatWest, they had 120 stand-up trainers,' says McLaren. 'The message we gave was that stand-up training is dead, but your job isn't necessarily dead. Instead of being a trainer, you might become a facilitator. Instead of being a provider of information, you're going to take information from business areas and turn it into different formats for delivery.' The group responsible for training and online training now consists of approximately 45 people.

Dave Buglass, manager of the learning infrastructure, says they also spent more time and effort marketing the training to the NatWest employees. 'That was a lesson learned in the RBS rollout of TCN,' he says. 'Because we offer multichannel delivery, we could cater to most of the staff as opposed to alienating them by saying online is the only way.' He adds that the training has gone over well at the NatWest branches. 'There's more enthusiasm.'

The roll out of TCN to the NatWest branches has been part of what has been called the largest IT integration project in Europe. Once it's completed next March, Buglass says his team will have to start answering the hard questions about where the organization will need to focus their attention next.

Although the group trained more than 20,000 employees, resulting in an impressive return on the initial investment, Buglass says it's starting to see less tangible benefits. For example, the bank uses the network to introduce new products faster and with more consistency than in the past, thus reducing the time to market. Also, before the rollout of TCN, employees leaving the bank cited a lack of training as one of the top reasons for their departure. Since then, lack of training has dropped to number seven on the list.

Buglass says the bank is developing some models and calculations to examine how training had improved productivity, increased efficiency, and identified business opportunities. For example, if someone goes into a branch with a credit card from another bank, will customer service employees notice that? Will they try to sign the person up for a credit card with the bank? Will they succeed?

The bank has started to calculate projected ROI upfront, so when a manager approaches HRD with a training request, Buglass and his team can estimate the cost and return immediately. 'It will help us prioritize training needs from the various divisions,' Buglass says.

Prioritizing will become more important, especially as RBS continues to grow. Since Buglass joined the bank 10 years ago, RBS has grown into the fifth largest banking system in the world. The Royal Bank of Scotland Group now has more than 106,000 staff worldwide and includes well-known brands such as NatWest, Ulster Bank in Northern and Southern Ireland; Coutts Group, which specializes in wealth management; Direct Line, an auto insurance and financial services company; Lombard, an asset finance company; and Citizens Financial Group in the United States, which recently acquired Mellon Financial Corp. It also has joint ventures with Virgin Financial Services and Tesco, a supermarket chain.

That growth prompted Buglass to re-evaluate the learning infrastructure. Will the homegrown LMS work with the bank's new PeopleSoft 8.3 HR system? Will the servers, hardware, and delivery mechanism be adequate during the next three years? Should collaboration or knowledge software be added to the mix?

Then there's the challenge of adapting the training again - this time for US employees at Citizens. 'We're having conversations about how to do this, how to improve efficiencies,' Buglass says. 'The cultural issues will be a challenge. We can't just go and roll out the model we've implemented in the UK so far.' He says the company hopes to introduce the training to Citizens' branches sometime in 2003. All of which can be a bit overwhelming when Buglass stops to think about it. 'The fact that I'm responsible for the learning infrastructure for the fifth-largest bank in the world makes me not sleep at night,' he says with a laugh.

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