Who will survive AI?

According to the Lex column in the Financial Times, Lloyds Banking Group axed 1,600 jobs in January last year, and is looking at the lowest ‘ranking’ 3,000 performers with a view to ‘yank’ out the worst 1,500. The spokesperson for the bank told the FT that it is ‘striving to embed a high-performance culture in the organisation… To achieve this, and in line with wider industry practice, we continuously look for ways to help our colleagues perform at their best’. 

Lloyds boss Charlie Nunn is a former McKinsey consultant and is familiar with the up-or-out policy of many professional services companies.

The term ‘rank and yank’ was popularised in the US by the former chief executive of General Electric, Jack Welch. It is harsh but effective in consultancies and other professional services organisations.

Lloyds, like so many professional service organisations I have spoken to, says that profitability is an increasingly common problem. Their primary focus has been on relocating less profitable departments to more cost-effective offices, utilising AI, or both.

Matt Britzman, an analyst at Hargreaves Lansdowne, compared the underperformance of Lloyds with NatWest and Barclays . He says Lloyds are pushing ‘to hire 4,000 people in its India tech hub by year's end’.

The plight of Lloyds is not helped by newcomers Monzo and Revolut, which are chipping away at the market share of the giant high street banks.

Revolut for example, currently holds a UK banking license but with restrictions, which it obtained in July 2024 from the Prudential Regulation Authority. During the restrictive period, UK customers still use e-money accounts, but the Financial Services Compensation Scheme does not cover these. Once the set-up is complete and Revolut is ready to operate as a bank, it will notify its customers of the following steps for their accounts to transition to full UK bank accounts.

Revolut, however, does not have the historic baggage of the high street banks, their high overheads and staff. I was told that 80% of queries addressed to Revolut are answered by AI and the remaining 20% are responded to by its hub in India, with AI translating their Indian dialect and manner of speaking into well-spoken ‘English’.

AI is a concern for any professional adviser since it can write technical advice and answer frequent questions in a non-jargon easy-to-understand manner. Will this undermine the work of the professional?

Yes and no. It is interesting to note that Jonathan Norbury’s team at Lloyds Private Banking in London said that the bank’s rank and yank only applies to the Lloyds staff who are monitored for performance. This does not apply to the private banking team in Mayfair.

Does this suggest that the human touch is reserved for the clients who pay more because they have more? I am sure that many of their concerns can be answered by an AI machine, but they need reassurance that they are making the right decision, such as how to deal with a spendthrift child.

I know what it feels like to be told that my team and I would be axed when I took over as head of Simmons & Simmons if I did not make a decent City-level profit within two years. But what frustrated me most was that there was no manual, no guide, no mentor to show me how this was to be done - this was because no one knew how to go about it.

In the absence of such a guide, I decided to carry out my research, which has led me to one glaringly obvious conclusion. In every professional organisation, there are geeks and rainmakers. AI is like a junior ‘geek’ division but its work still needs to be checked by a personal, professional ‘Geek’. Organisations which will rise to the top in tomorrow’s AI driven, cost cutting environment need to have a clear understanding of what tomorrow’s world of geeks and rainmakers looks like. 

The geeks are there to check the robots. AI machines are not human, they don’t understand that some of the ‘logic’ it spews out is garbage. ChatGBT is a potent machine but some of its answers are ‘made up’ and are wrong. If an organisation is to survive claims for negligence it will need to check the answers of the machines by human geeks.

But of more importance is the role played by the rain-makers, and this is where the most progress is needed. My methodology has been called a ‘Client First Revolution’ and this is what is required.

I would like to see a professional organisation treat its services like the luxury products they really are. My favourite ad was for Stella Artois beer ‘Reassuringly expensive’, which is how clients need to be made to feel.

They need to be made to feel as if the professional is there to recommend them to top advisers in different disciplines. This is easily done through ‘Client Mapping’ thinking about what other services their clients may require, making up a case study and asking six professionals to respond from the specialist services perspective a digital ‘Pod’. The link can then be sent to the client to build loyalty and trust.

Each participating professional can then be encouraged to set up their own Pod of professionals centred around a different client story and more responses can be recorded. The professionals can then connect with others from different pods and thereby build a highly strategic and effective network with professionals who are engaged with the same type of client.

Our Client First Revolution is the way forward in tomorrow’s world of AI, but to rise to the top, a new way of working is needed, and those who embrace it will get the early adopter advantage.