By Andrew Davidson Tuesday, 23 February 2016

Interview: Virgin Money CEO Jayne-Anne Gadhia on glass ceilings and financial disruptors

THE MT INTERVIEW: The Virgin Money CEO on when banking's 'Uber' moment will come, and addressing the woeful lack of women in senior finance roles.

Photography by Jo Hanley

Tall, blonde, beaming and ever so slightly boisterous, Jayne-Anne Gadhia has a knack for chat that disguises a useful dollop of calculation. The last time we met, she finished our interview with a smile and a handshake and a sincere plea: ‘Just don’t make me look like a numpty.’ So imagine my surprise when I saw her in the photograph for the piece, jumping up and down wildly on a double bed. Is that what you want to see from a banking boss?

She laughs about it now. ‘How stupid was I? The photographer came round and we did lots of serious pictures, and I remember him saying "let me take a couple of family photos for you…", so my daughter and I did the jumping on the bed for fun. And guess which photo The Sunday Times used? Haha.’

Oh those evil newspapers. She was, of course, not stupid at all – because, as she says, everyone remembers the picture. Born in the West Midlands, now heading the banking offshoot of Richard Branson’s Virgin brand, Gadhia is a dab hand at dealing with the media, despite her protestations to the contrary. She has also proved herself adept at developing a business. She is now one of the most powerful women in financial services, and Virgin Money, the bank she has helmed since 2007, is growing steadily, with nearly three million customers and 75 ‘stores’.

Sixteen months ago, Gadhia oversaw the listing of the business, valued at £1.25bn, and eight months ago she was asked to head a Treasury review of women in finance. Its brief: to find out why female managers are under-represented in senior roles in financial services and to produce a set of policies to rectify the situation. So that’s a lot of jumping up and down, and shaking the market about, on her agenda.

‘I was surprised to be asked,’ she says of the report. ‘I always thought I don’t want positive discrimination, and I don’t want to be seen as a shining light for the feminist movement. Then when I delved into all the material…’

She was, she says, ‘shocked’. The proportion of women that rise from the ranks to the top is far smaller in financial services than in nearly every other sector, including engineering. And that has got to be linked to the macho culture that created the financial crisis of 2008. So here was an opportunity to do something about it. ‘Get it right,’ she says bluntly, ‘and it could be a game-changer.’

 The key with Gadhia is that she is always likably down-to-earth. Her conversation is sparky, her appearance is plain – simple black dress, barest touch of make-up – and by reputation, she is fearsomely well-organised. The whole package exudes purpose and friendliness, which is a powerful combination in banking, where arrogance and complexity have created so many problems over the last decade.

She also likes to claim much of her success has been down to ‘accident’: lucky strategies, chance discoveries. Yet, she started as an accountant at Ernst & Whinney and honed her management skills under Fred Goodwin at RBS, jumping ship presciently before the 2008 crash – her rise has not come without determination.

And just like RBS, Virgin Money keeps a base in Edinburgh, but not on a swanky, out-of-town campus – just in a beautiful, listed building overlooking St Andrew’s Square, behind Princes Street, where we meet. Modern glass offices behind, panelled grandeur downstairs, elegant Victorian façade in front. The five-storey building led to one innovation that may prove the most powerful in an array of initiatives that Virgin Money has tried in order to differentiate its business.

Walk in the main entrance, up the elegant staircase and you come to a suite of large, panelled rooms on the first floor, overlooking the square. Gadhia, not wanting to use them as offices, decided to open them as a coffee lounge where customers could bring friends, or simply sit and work. No banking tills, no advisers behind desks, no one trying to sell you anything. Just sofas, Wi-Fi, iPads and free refreshments, plus the odd Virgin Money leaflet.

On paper, it seems a strange initiative. But five years on, Virgin Money has opened five more lounges, and celebrated its millionth customer through. It’s proved a winner – not least in the clever way it taps into the goodwill generated by Virgin Atlantic, the airline, for its airport lounges. The two businesses share a major shareholder – Virgin Group owns 34% of Virgin Money and 51% of Virgin Atlantic – and a director, but otherwise are very separate entities.

‘Sure, customers were suspicious at first,’ acknowledges Gadhia, ‘but we diligently carried on not selling them anything, just giving them coffee. Now we have an average of 350 people through here each day, and some days our lounge in Norwich gets 800.’

Do they cost a lot? She grins. ‘Depends what you quantify as a lot. But if you look at it as a business case, it makes sense. Customers come along and sometimes they bring a friend, and the friend says "this is a different kind of bank, how do I become a customer?"’

Next, Gadhia wants to make them funkier. The lounge in London’s Haymarket has a lower floor designed in the style of an airliner cabin with a cockpit simulator playroom for kids. A new one in Sheffield will have a full bowling alley downstairs.

But is this the sort of thing a bank offering current accounts, credit cards and insurance should be doing? I’m amazed Virgin Money’s investors haven’t baulked at the cost. She shakes her head. ‘I took one of our big international investors round because they are interested in seeing how the lounges work, and the boss turned to me and said, "Keep rolling these out, these are the big differentiators." They can see the investment case.’

Because the biggest problem she faces up against larger rivals such as Barclays, Lloyds, NatWest and Santander is that consumers are so sticky – they won’t shift accounts. Yet wouldn’t it take more than a lounge to make anyone switch? Of course, she counters, and then enunciates a long list of Virgin Money’s differences, though I am not sure if I would have noticed many of them from the outside. She is particularly proud of the business’s mission statement: to make Everyone Better Off.

‘Everything we do has to mean something. We’ve created a business with a strong culture, and I think it gives us our distinction and difference.’ She cites Virgin Money’s acquisition of Northern Rock in 2011, and their need to bring down that business’s unsustainable savings rates. ‘We needed to reduce them to be commercially sensible and the team produced a plan, and I said, how is this consistent with Everyone Better Off? And no one had ever asked that kind of question in Northern Rock.’

Eventually they settled on an offer to maintain rates for customers who pledged a three- or five-year commitment. ‘It’s a culture that enables us to give consistency across the business,’ she says of Everyone Better Off. Yet, the EBO principle is pretty much ingrained in most businesses’ marketing outlook these days, isn’t it? She disagrees, pointing to the legacy issues at older banks that prevent change, and encourage the squeezing of customers for profit. She argues that innovations such as the lounges are ‘a clear marker’ of the EBO principle.

‘I think the biggest issue for us now is the structure of the current account climate,’ she says, slightly mangling her metaphor. ‘The Treasury has done a lot to make it easier to shift accounts but what hasn’t changed is…’  She pauses and grins. ‘Now, how do my lawyers want me to say this? What hasn’t changed is the closed shop of big banks. It has not yet been addressed in such a way that real innovation in current accounts is alive and kicking.’

Meaning? ‘Even though it’s easier to switch, almost all the current accounts are the same – the exception is Santander 123 [which pays you cashback on household bills and interest, for a £5 monthly fee] and that’s great – but at NatWest you get a blue version and Barclays a turquoise version, it’s all the same. Current account funding is massive and cheap and why would a big bank want to change?’

Well, equally, if a free current account does the job, why would we as consumers want it to change? We don’t mind if they are cross-subsidised. ‘Because,’ she says, ‘you haven’t seen how good the future could be! The analogy I like to use is telephones. You and I are old enough to remember the old brick mobile phones. We used to think they were a brilliant innovation. Then we got smaller Nokias, fantastic, can’t go any further, and it was a pain in the arse if you wanted a new handset as you had to change the number. And now look at them. Who would have imagined we could do what we do?’

Current accounts are the same. ‘What banks are doing is locking us into the old Nokia system. OK, you can make financial transactions but imagine a world where banks really had to fight for your business, imagine the new thinking that would produce.’ Others have already predicted that traditional banks will soon face their ‘Uber’ moment, when established practices are swept away by disruptive technology – an era of open data that will see easy switching, real innovation and ramped-up marketing. Gadhia wants Virgin Money to be ready. ‘I’m not clever enough to invent the smartphone, but having the freedom to allow cleverer young people to think about the future of banking is super-important.’

Does she expect all this to be addressed in the forthcoming review of retail banking by the Competition and Markets Authority (CMA)?  She shrugs and rolls her eyes. The review has been ongoing since November 2014, and keeps pushing back its end-date. Maybe June 2016, maybe later. Gadhia, it is clear, is not impressed with what she’s heard so far. ‘When its interim report came out last year, it’s fair to say I was dead-cat-bounce disappointed. What has changed? Where is the opportunity to give customers the smartphone of banking? At least, if they are deferring the report, it might make it more exciting.’

She will get her own chance to impress a sceptical audience when she unveils her report into women in finance on 22 March. The facts driving the report are simple: women provide roughly 60% of the intake into financial services. But when you get to the senior roles, ‘you can count the number of women on a few hands’. She has been tasked with finding out why, and suggesting ways to remedy this.

She is not the first to look at this, but the timing is acute. The world economy seems on the edge of another crisis, and many think the problems that emerged in 2008 were testosterone fuelled, in part. Women, because they are not so obsessed with size or scale, might offer more sensible leadership. Yet many are driven out of financial service businesses by a combination of culture and opportunity. What can she suggest to change that?

‘Well, when we started, the first thing we found was that there were lots of similar reports on the subject, and I wanted to avoid producing another that ends up on the shelf. So first I thought we’d research it properly. We commissioned a YouGov survey of employees in financial service companies, and we got 3,200 responses – I’m chuffed with that – 80% of them women.’

Her aim now is to produce a ‘Top 10 list’ of policies that would help women progress through financial services. She does not want positive discrimination, just a shift in culture: companies to set their own gender balance targets, executives to be put in charge of hitting those targets, and bonuses tied in. She also cites the key attitude she would like to see changed.

‘Where most women fall out of career progression is middle management, and lots of people responded that their line manager needs to be more supportive of their personal circumstances. In financial services, there is a perception that you have to be present, in early and here later, and you have to work hard. And I do work hard, but I don’t have to be here 10 hours a day as I have my Blackberry with me everywhere.’

Corporate culture needs to encourage flexibility, so that female managers can do their job wherever they are. And that means a more creative use of technology. ‘People are saying "we have all this technology in our private lives, why are we not more flexible with technology at work? Just give us the kit".’ There is, she adds, no right answer for every company. ‘But what we are encouraging organisations to do is work out their own answer for their own people.’

And how do businesses get round the immutable fact that women have babies and need time off to do so? And that some might want to return to work after weeks, and some after years? Men have got to think beyond ‘the baby thing’, she says. ‘Women and men have to find their own solutions to that issue. I do not see it as a problem. Every business has to make up its own mind how it wants to do that.’

She has admitted that her own experience was difficult. Her daughter was conceived after a struggle with six courses of IVF, and she returned to work too soon, finding it tough. Long-term, the problem of childcare was only resolved when her husband, an accountant, stopped work, but she has since talked openly about her efforts to conceive and the strain of being a working mother. It is part of her nature to be frank, but it’s also done with a view to enlightening male management that work is about more than just numbers. She is a formidable networker and this effort at communication is what she wants to see more of. ‘You should be able to sit down with your boss and say "this is the way I am thinking about managing my work life after I have a baby, I want to be off for 12 months or whatever". But that’s all mixed up with culture.’

She remembers talking to her boss at RBS, Norman McLuskie – now senior independent director at Virgin Money – when she was pregnant, promising she would be back to work quickly. ‘And he said, "Jayne-Anne, you don’t know how you’re going to feel when you’ve had your baby, why not work out what you want to do and then we’ll see?" How brilliant was that?’

So do male managers simply have to be more sensitive to the needs of their colleagues – something women are generally seen as better at doing? Is her EBO initiative evidence of a softer, more feminine culture? Gadhia pulls a face. ‘I don’t think this is about women being touchy-feely.’ Some women, she points out, are pretty good at taking on male qualities, and vice versa. Some women are also pretty bad at helping other women. ‘There is, as Madeleine Albright has pointed out, a special place in hell awaiting women who don’t help other women...’

So who helped Gadhia along the way? Mainly men, you suspect, simply because the higher echelons of financial services are so male dominated. But she was well-suited to the culture. Born an only child in Stourbridge to ambitious parents – her father a manager, her mother a one-time Barclays cashier – she had attended an all-boys school, Culford in Bury St Edmunds, from the age of 12, among the first intake of girls there.

She has talked in the past about the casual cruelty of male teens and the constant teasing she endured about her height and looks. But it left her determined to succeed, and at ease – or should that be en garde – in a male culture.

‘My mother is very strong-willed, my father interested in all life,’ she told me six years ago. ‘I had to be assertive to come back from being pushed around at school.’ These are characteristics which define her approach to management. ‘We are very collegiate but at the end of the day someone has to make a decision and if we haven’t reached it collegiately, that’s me.’

And gender is not the only issue she is focusing on now. Her husband is Gujarati Indian and hence her daughter mixed race – that makes diversity a personal issue too. And she admits, until she got involved in the Treasury’s report, she hadn’t fully focused on either gender or diversity. ‘Now it’s very much alive around the Virgin Money board table, and it’s not as good here as I want it to be. We’re slightly better than the norm on gender but when we do the analysis, women do fall out of middle management here. So we’re addressing it, and thinking about it, and making it a discussion point.’

These are issues that come up now repeatedly at staff meetings, and they are the topics she is asked to speak on externally. Anyway, time is up, she has to have her photograph taken – no bouncing – and then dash to a meeting for Scotland Stronger In Europe.

Final question: what does she do to relax? I’m guessing, with a bit of gender stereotyping, that she didn’t spend her reported £3.65m pay and perks package in 2015 collecting fancy cars… ‘Haha, "my Porsche is bigger than yours" kind of thing?’ Yup, that kind of thing. ‘Well, my daughter Amy is 13. Weekend life revolves around her,’ she says. Otherwise she’s not sure what she does. ‘I’d love to be able to say I ride, sail and sew, but I don’t. I do enjoy watching football. I took Amy to see Chelsea v Man U. She loved it. My husband is a Chelsea fan, I’m Man U.’ How does a Stourbridge girl end up supporting Man U? She laughs again. ‘Oh come on. David Beckham.’

Otherwise she just enjoys being at her Edinburgh home, where her parents now live too. Her husband works for three charities. Half the week she is usually travelling, away from Edinburgh. ‘This week has been unusual as I’ve been sleeping in my own bed…’ Another grin. ‘Careful how you write that.’

Oh stop it. Perhaps she should be weighed down with the worries of the banking world, but she seems both determined and happy. And that can be infectious. If her women in finance report initiates real change, she will be happier still. ‘All I can do is make the issue come to the table so CEOs and executive teams think about it and plan it and report it. If that happens, I will feel I have made a bit of a difference.’

Hear more from Jayne-Anne Gadhia at MT's Inspiring Women conference in Edinburgh on 17 March. 

Three challenges facing Gadhia

To convince consumers that Virgin Money is a more attractive proposition than the established high street banks

To produce a report on women in finance for the Treasury that encourages real change 

To show she can ‘walk the talk’ by putting more women into senior positions at Virgin Money

Gadhia in a minute

1961: Born 16 October in Stourbridge, educated at Culford School, and Royal Holloway University

1982: Trainee accountant, Ernst & Whinney

1987: Marketing director of Norwich Union’s Unit Trust business

1995: Helps launch Virgin Direct Personal Financial Services as joint venture with Norwich Union

1997: Launches the Virgin One account as joint venture with RBS

2001: Works for RBS after it buys Virgin One

2007: Rejoins Virgin Money as CEO

2011: Acquires Northern Rock

2014: Lists Virgin Money on the London Stock Exchange

2015: Appointed to head report into women in finance for the Treasury

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