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Embracing culture change on the path to digital transformation



Embracing culture change on the path to digital transformation

Meanwhile, young financial services companies were coming to market with innovative products and services and NAB was finding it difficult to compete. “Many customers today are expecting an Amazon experience, a Google experience, a Meta experience, but we were still operating in the 1990s,” says Day. “We stood back, and we looked at it, and we decided that our entire culture needed to change.”

What ensued was nothing less than an internal transformation. “Our original teams didn’t have a lot of tech skills, so to tell them that they were going to have to take on all of this technical accountability, an operational task that had previously been handed to our outsourcers, was daunting,” says Day.

Day and his team rolled out a number of initiatives to instill confidence across the organization and train people in the necessary technical skills. “We built confidence through education, through a lot of cultural work, a lot of explaining the strategy, a lot of explaining to people what good looked like in 2020, and how we were going to get to that place,” says Day.

This episode of Business Lab is produced in association with Infosys Cobalt.

Full transcript:

Laurel Ruma: From MIT Technology Review, I’m Laurel Ruma. And this is Business Lab. The show that helps business leaders make sense of new technologies coming out of the lab and into the marketplace. Our topic today is digital transformation. Most organizations have begun the journey to digitize their services and operations, and some are further along than others in bringing disruption to the marketplace. How do you bring transformation to organizations that are in highly regulated, service-based industries where competitive differentiation requires innovation?

Two words for you, internal transformation.

My guest is Steve Day, the chief technology officer of enterprise technology at National Australia Bank.

This podcast is produced in partnership with Infosys Cobalt.

Welcome, Steve.

Steve: Thank you, Laurel. It’s a pleasure to be here.

Laurel: National Australia Bank or NAB is undergoing a significant digital transformation. Gartner recently found that IT executives see the talent shortage as the largest barrier to deploying emerging technologies, specifically cloud-based technologies, but NAB uses insourcing. Most listeners are familiar with outsourcing, what exactly is insourcing and how does it relate to outsourcing?

Steve: Yeah. I think it’s all in the name. Insourcing would be the exact opposite of outsourcing. And to give you a little bit of history, National Australia Bank, like many banks, decided to outsource a large part of its operations in the 1990s. We basically pushed all our operations and a large part of our development capability out to third parties with the intent of lowering costs and making our operations far more process driven. I think those two objectives were achieved, but we did have an unintended consequence. We basically froze our operations in time, and that created a situation. If you roll forward to 2018, we realized that we were still operating like we’re in the 1990s. We were very waterfall driven. Our systems were highly processed driven, but in a very manual way, and it took us a very long time to roll out new products and services that our customers really needed.

It was about at that time that we realized we needed to do something different. We spoke with our outsources, of course, but to be honest, they weren’t motivated to reduce our internal costs and to help us become far more agile. They were very happy for us to be paying them large amounts of money to do large amounts of work. So at that point, we decided to bring our capability back into the business.

Laurel: So waterfall being the opposite of agile, right? You were finding that was hindering your progress as a company, correct?

Steve: It really was hindering our progress. We were very slow. It took us years to roll out new products and services. We had some young financial services companies knocking on the doors, startups, and the like, that were agile and able to compete really quickly, and we needed to change. We needed to look at a different way to roll out our products so that we could give customers what they’re expecting. Many customers today are expecting an Amazon experience, a Google experience, a Meta experience, but we were still operating in the 1990s. That’s when we really pushed our call too. We stood back and we looked at it, and we decided that our entire culture needed to change.

We did that by building a series of tech guilds. We built a cloud guild, a data guild, an insourcing framework. We built our NAB Engineering Foundation and with a goal of building a culture of innovation of cloud, of agile, and being able to deliver great products and services to our customers in a cost effective, but very safe way. And as part of that, we started on our cloud migrations and that is really moving at pace now.

Laurel: Insourcing seems to be working so far, but it didn’t happen overnight, as you said. And even though 2018 wasn’t that long ago, what was the journey like to first realize that you had to change the way you were working and then convince everyone to work in a very different way?

Steve: We did realize that if we didn’t get the culture embedded that we would not be successful. So building that capability and building the culture was number one on the list. It was five years ago. It feels like a very long time ago to me. But we started that process and through the cloud guild we trained 7,000 people in cloud and 2,700 of those today are industry certified and working in our teams. So we’ve made really good progress. We’ve actually moved a lot of the original teams that were a bit hesitant, a bit concerned about having to move to this whole new way of working. And remember that our original teams didn’t have a lot of tech skills, so to tell them that they were going to have to take on all of this technical accountability, an operational task that had previously been handed to our outsourcers, was daunting. And the only way we were going to overcome that was to build confidence. And we built confidence through education, through a lot of cultural work, a lot of explaining the strategy, a lot of explaining to people what good looked like in 2020, and how we were going to get to that place.

Laurel: NAB’s proportion of apps on public cloud will move from one third to about 80% by 2025, but security and regulatory compliance have been primary concerns for organizations and regulated industries like healthcare and financial services. How has NAB addressed these concerns in the cloud?

Steve: Initially, there was a lot of concern. People were not sure about whether cloud was resilient, whether it was secure, whether it could meet the compliance requirements of our regulators, or whether the board and our senior leadership team would be happy to take such a large change to the way we did business. We actually flew the board over to meet with many of the companies in the Valley to give them an idea of what was going on. We did a huge education program for our own teams. We created a new thing called The Executive Guild, so that middle management would have a great feel on what we were doing and why we were doing it. And as part of that, we created a set of tools that would help us move safely.

One of those was CAST, a framework that we use to migrate applications to cloud. CAST stands for Cloud, Adoption, Standards, and Techniques. And it really covers all the controls we use and how we apply those controls in our environment to make sure that when we migrate applications to cloud, they are the absolute safest they can be. It’s safe to say that when we built CAST, we actually did an uplift in our requirements. That enabled a lot of people to see that we were taking it very seriously, and that it was actually quite a high bar to achieve this compliance. But we were willing to invest, and we invested a lot in getting the applications to that level.

Another thing we did was build compliance as code. Now, infrastructure as code, what cloud is built on, allows you to then create compliance as code. So all of the checks and balances that used to be done manually by people with check boards, I used to say, are now being done in the code itself. And because a server is no longer a piece of tin in the corner, it’s an actual piece of code itself, a piece of software, you can run a lot of compliance checks on that, also from software.

A third thing that we did to give everyone a sense of comfort is we didn’t pin the success of NAB to the success of any one cloud company. We came up with a public, multi-cloud strategy, and that meant that at least for all our significant applications, we would run them on two different cloud providers. Now that would be expensive if you did every cloud in the most robust way, which would be active-active across both clouds. So we created our multi-cloud framework, which was about categorizing each application across multi-dimensions, and then assigning that workload to one of six multi-cloud treatments. Multi-cloud treatment one being, basically no multi-cloud, it’s an app for convenience. It doesn’t really matter if that application goes away. We allow that to sit in one cloud all the way through to our most critical applications, which we insist on running active-active across both clouds. And in our case, that would be MCT6. So given all of those frameworks, the tools, and the focus that we put on that, I think we gave the organization and the leadership at the organization some confidence that what we were doing was the right move and that it would give us our ability to serve customers well, while also remaining safe.

Laurel: How has cloud enabled innovation across NAB? I can see it in the teams and you’ve even upskilled executives to be comfortable with technology and what agile means and how you’re going to change the way that things are done. But what else are you seeing that’s just brought some kind of a particular efficiency that is a particularly proud moment for you?

Steve: I think I would go back to that description I just gave you about infrastructure as code being an incredible enabler of innovation. I mentioned compliance as code, but there’s also all kinds of operational innovation that you can perform when your infrastructure is software rather than hardware. Just being able to replicate things very quickly. The fact that you can have as many development environments as you need to develop your applications quickly and efficiently, because when you’re finished with them, you just turn them off and stop paying for them. The fact that we can move to serverless type applications now that don’t actually require any infrastructure sitting below them and enable our application team to not have to interact with anyone and just get on and develop their applications. Things like grid computing, which create massive computing power for a short burst of time. You pay a lot, but you only pay a lot for a very short amount of time. So you end up paying not very much at all. But to achieve massive things in predicting what the market’s going to do at times of concern and things like that.  Infrastructure-aware apps, some of the amazing things we are doing in cyber at the moment to understand cyberattacks, to be able to thwart them in a much more elegant way than we have in the past. Financial operations that enable us to take control of the elasticity of that cloud environment. And all of those things sort of add up to this platform of innovation that people can build things on that really create creative innovation.

Laurel: And how does that turn into benefits for customers? Because user experience is always an important consideration when building out tech services and as you mentioned, customers certainly expect Google- or Meta-like experiences. They want online, fast, convenient, anywhere they are, on any device, so how is something like artificial intelligence at an ATM serving both the need for improved security and improved user experience?

Steve: Great question. I think for improved security, fraud is a great one. There are so many scams going on right now, and AI has really enabled us to be able to detect fraud and to work with our customers, to prevent it in many cases. We’re seeing patterns of fraud or the ways that fraudsters actually approach their victims, and we’re able to pick that up and intervene in many cases. Operational predictions on things that are going to fail or break. And then things that are just better for customers like faster home loans. A large number of our home loans are approved in under an hour now because the AI allows us to take calculated risks, basically to do risk management in a really fast and efficient way. And then there are small things. There’s some great stuff like if I get a check, I just take a picture of it from my banking app on the iPhone and it’s instantly processed. Those sorts of things are really leading to better customer experiences.

Laurel: That’s my favorite as well, but a home loan under an hour, that’s pretty amazing.

Steve: And that’s because we have a history of what that customer’s done with us. We no longer have to have that customer fill in large surveys of what their monthly spending is and what their salary is and all of that. We have all that data. We know all that about the customer and to have to ask them again, is just silly to be frank. We can take all that information and process it directly out of their account. All we need is the customer’s permission. The open banking legislation and things that have come through at the moment that allow us to gain access to information with the customer’s permission through their other financial services, that also enables us to have a good understanding of that customer’s ability to meet their repayments.

We also do a lot of AI on things like valuations. The amount of AI going into valuing the property now is absolutely incredible. In the past, you’ve had to send somebody out to a house to do the valuation so that they can appreciate things like road noise, right? How much road noise does that property have? What are the aspects of that house? And through being able to look at, say, Google Maps and see how many cars per hour are flowing past that house, what the topology of the landscape is around that house, we can actually do calculations and tell exactly what the road noise is at that property. And we’re able to use layers and layers and layers of information such as that and that goes along with, is the house on a flood plain? Is the house overflown by aircraft, what material is the house made of? We can pick all of that from satellite imagery. Does it have a swimming pool? Does it have solar panels? We can gather a lot of that and actually do the valuation on the property as well, much faster than we have in the past. And that enables us to then provide these really fast turnarounds on things like home loans.

Laurel: That’s amazing. And of course, all of that helps keep innovation up at the bank, but then also improve your own efficiencies and money. Making money is part of being a business. And then you put the money back into making better experiences for your customers. So it’s sort of a win-win for everyone.

Steve: Yeah, I think so. I haven’t loaned money for a house since all of that has been put into place, but I’m really looking forward to the next time I do and having such a good experience.

Laurel: Collaborating with your customers is very important and collaborating with your competitors could be as well. So NAB teamed up with cloud providers and other global banks on an open digital finance challenge to prototype new banking services on a global scale. Why did NAB decide to do this? And what are some of the global financial challenges this initiative was looking to solve?

Steve: I think creating great partnerships to encourage innovation is a path forward. Like everything, we don’t have a monopoly on great ideas. And I think if we limited ourselves to the ideas we came up with, we wouldn’t be serving our customer’s best interests. Searching globally for great ideas and then going through a process of looking to see whether they can actually be productionized, it’s a great way of bringing innovation into the bank.

My favorite at the moment is Project Carbon, which is seven banks around the world all getting together to create a secure clearinghouse for voluntary carbon credits, which if you think about that and where the world’s going and how important that will be going forward, it’s just absolutely wonderful that we’ve got this situation being built today. But yeah, there’ll be things that create more secure payments, faster payments, more convenient payments, more resilient ledgers, and I mentioned faster home loans, etc. It’s just an exciting time to be in the industry.

Laurel:  And to be so open and willing to work with other folks as well. What else are you excited about? There’s so much innovation happening at NAB and across the financial services industry, what are you seeing in the next three to five years?

Steve: I’m seeing a faster pace of change. One of the things I’m aware of at the moment, things are changing so fast, that it’s really hard to predict what is going to come up in the near future. But one thing we know for sure is we will need a platform that enables us to pivot quickly to whatever that is. So I’m actually most excited about the opportunity to build a platform that is incredibly agile and allows us to pivot and to move and to exploit some of these great ideas that are coming in from global partners, or internally or wherever they’re coming from. Our new graduates come up with quite a few themselves. How do we get those ideas to production really quickly in a safe way? And I think that is what really excites me is the opportunity to build such a platform.

Laurel: Steve, thank you so much for joining us on the Business Lab. This has been a fantastic conversation.

Steve: Thank you, Laurel.

Laurel: That was Steve Day, the chief technology officer of enterprise technology at National Australia Bank, who I spoke with from Cambridge, Massachusetts, the home of MIT and MIT Technology Review overlooking the Charles River. That’s it for this episode of Business Lab. I’m your host, Laurel Ruma. I’m the director of Insights, the custom publishing division of MIT Technology Review. We were founded in 1899 at the Massachusetts Institute of Technology. And you can find us in print, on the web, and at events each year around the world. For more information about us and the show, please check out our website at

This show is available wherever you get your podcasts. If you enjoyed this episode, we hope you’ll take a moment rate and review us. Business Lab is a production of MIT Technology Review. This episode was produced by Collective Next. Thanks for listening.

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.


Technology and industry convergence: A historic opportunity



Technology and industry convergence: A historic opportunity

And it’s that combination of technology and human ingenuity, as we say, and as Danielle just alluded to in her medical example on cancer treatment, that is really where the greatest value and the greatest impact is going to come. We believe the companies which are going to be leaders in the next decade are going to need to harness five forces, and all of these forces are going to require technology and ingenuity to come together. They’re going to require organizations to work across all elements of their organization, to work with new partners, to expand into new areas and ecosystems, to learn and collaborate with innovators across industry, as well as across industry and academia and beyond to really push the boundaries of science and impact.

The five forces that we see right now, the trends that we’re seeing that are impacting our clients the most really start with what we believe underpins everything right now, and that is something we’re calling total enterprise reinvention. And we really started to see this come to the fore as we moved through covid. And what we’re seeing now is that as companies are looking to enter these new waves of change and opportunity, that they’re needing to execute strategies to change and transform all parts of their business through technology, data, and AI, as Daniela just talked about, to enable new ways of growth, new ways of engaging customers, new business models, new opportunities, but they’re doing it in a very different way. They’re doing it in a way where they’re looking at every part of their organization and the technology and digital core that underpins it at the same time, so we believe we’re in the early stages of this profound change, but we believe it’s going to be the biggest change since the industrial revolution.

And embracing total enterprise reinvention often requires something that we call compressed transformation, which are bold transformational programs that, as I said, span the entire organization with different groups working together in ways that they never did before in parallel, but in very accelerated timeframes. And underpinning all this is leading edge technology, data, and AI. At the same time, the second trend we’re seeing with our clients, and we certainly are all reading about it and of hearing about it for the past few years, is the power of talent and the importance of the human side of this equation. And we think that one of the forces that’s going to shape the next decade with talent at front and center is not just the ability to access talent, but really for organizations to learn to be creators of talent, not just consumers. To unlock the potential of the humans in their workforce. And that’s going to require technology to unlock that potential. And again, as Daniela just gave in some of her examples, to compliment the talent that they have in the organization.

The third is sustainability. That trend is … I would say personally, I’m very pleased to see this trend underpinning everything that we’re doing and everything that our clients are thinking about right now. We believe that every business needs to be a sustainable business. And every industry is looking at this in a way that is unique to their industries. But whether it’s consumers, employees, business partners, regulators, or investors, we know that we’re moving in a direction where companies are being required to act. To make a change, not just around climate and energy, but areas like food insecurity and equality. All of those issues are coming to the fore, and underpinning this, again, is the ability to leverage new bleeding technologies to accelerate the pace of change and find solutions to the issues that we’re facing as a planet and across society.

The fourth force that we’re seeing is the metaverse. Now, there’s been a lot of confusion, and a lot of talk about the metaverse, but our view is that the metaverse is a continuum, and we’re seeing this come to the fore in the marketplace right now. As we look at the metaverse and how that’s going to impact, just if you think all the way back to when the internet was in its early stages, we believe that the impact is going to be that great. And while it’s early stages and not everybody can see exactly how the impact is going to be there, we believe that this is going to impact not just consumers, and of course interesting areas like virtual reality and using AI to bring new experiences to life, but also to look at extended reality, to look at digital twins, smart objects. So how do cars and factories run? What’s happening with edge computing? Looking at blockchain and new ways of payment. All of those things are going to change the way businesses operate and really the way society operates, and we believe that this is going to underpin change as we move forward over the next five to 10 years.

And then lastly, the fifth force is what we’re calling ongoing tech revolution. And the ongoing tech revolution is a pretty broad expansive category, often pushed by our friends in the academia world around science, but we believe in the coming decade, the pace of technological innovation is not just going to continue but accelerate, which we believe is going to create positive change. New technology, whether it’s in quantum computing or it’s in areas, as I said, like blockchain or material science or biology, or even space, we believe this is going to open brand new areas of opportunity. And all of these things are allowing companies, our clients to find new ways to not just serve their customers, but to monetize their investments, to impact society, to impact their employees, and to drive positive change for their business as well as for the world around them.

Laurel: Yeah. Kathleen, I feel like some of that acceleration happened in these last few pandemic years so that businesses and consumers are operating differently from remote healthcare solutions to digital payments, greater expectations of those immersive virtual experiences. But how can organizations and technologists alike then continue to innovate to anticipate the future, or as Accenture likes to say, learn from the future? You have some good examples there, but the five different areas all kind of also lead to this acceptance of change.

Kathleen: Yeah, they do. And they also lead to embedding data in everything, in new ways into every change that organizations are putting forward. When we think of learning through the future, we think about organizations and leaders who are constantly seeking new data and insights, not just from inside their organization, but from outside their organizations’ four walls. So we like to use the phrase intentional futurists. These are people and leaders and organizations who use AI-based analysis to find patterns, anticipate trends, detect new sources of growth opportunities, understand their consumers, their customers, other enterprises, the markets and their employees better.

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Delivering insights at scale by modernizing data 



Delivering insights at scale by modernizing data 

This data is often siloed in enterprise resource planning (ERP) systems. However, with ERP data modernization, businesses can integrate data from multiple sources, which will ensure data accessibility and create the framework for digital transformation. Migrating legacy databases to the cloud also gives companies access to AI and ML capabilities that can reinvent their organization. According to Anil Nagaraj, principal in Analytic Insights, Cloud & Digital at PwC, companies that modernize their ERP data see increased efficiencies, costs savings, and greater customer engagement, especially when it’s built on a cloud platform like Microsoft Azure.

Cloud transformation—along with ERP data modernization—democratizes data, empowering employees to make decisions that directly impact their segment of business. And in an increasingly competitive marketplace, becoming data-driven means organizations can make faster, timelier, and smarter decisions.

Download the report.

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.

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The Download: the threat of microplastics, and mitigating AI bias



Microplastics are messing with the microbiomes of seabirds

The news: While we know that tiny pieces of plastic are everywhere, we don’t fully understand what they’re doing to us or other animals. Now, new research in seabirds hints that it might affect gut microbiomes—the trillions of microbes that make a home in the intestines and play an important role in animals’ health.

The findings: Seabirds ingest plastic from the ocean, which can accumulate in their stomachs. The research shows it leaves the birds with more potentially harmful microbes in the gut, including some that are known to be resistant to antibiotics, and others with the potential to cause disease.

Why it matters: The report expands our view on what plastic pollution is doing to wildlife, and shines a light on the wide spectrum of adverse effects brought about by current plastic levels in the environment. The next step is to work out what this might mean for their health and the health of other animals, including humans. Read the full story.

—Jessica Hamzelou

What if we could just ask AI to be less biased?

Think of a teacher. Close your eyes. What does that person look like? If you ask Stable Diffusion or DALL-E 2, two of the most popular AI image generators, it’s a white man with glasses.

But what if you could simply ask AI models to give you less biased answers? A new tool called Fair Diffusion makes it easier to tweak AI models to generate the types of images you want, such as swapping out the white men in the images for women or people of different ethnicities. A similar technique also seems to work for language models.

These methods of combating AI bias are welcome—and raise the obvious question of whether they should be baked into the models from the start. Read the full story. 

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