WITH its grand façade and ornately ceilinged banking hall, Clydesdale and Yorkshire Banking Group’s headquarters on Glasgow’s St Vincent Place speak to an institution steeped in history and riches.

Contrast this with Studio B, the banking group’s “creative and interactive space” on London’s Kensington High Street that has been “designed to open minds and inspire the kind of thinking that could shape the future of banking”, and you get a flavour of the conflicting forces influencing the banking sector today.

For James Peirson, group general counsel of CYBG, this dichotomy colours all aspects of the work he and his 25-strong legal team does, with the drive to innovate in the face of growing digitalisation sitting alongside the need to comply in what remains a highly regulated sector. That those regulations have failed to keep pace with the rate of change brings its own layer of complexity.

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“That’s what I love about the job at the moment, the team is having to travel pretty fast within a business that’s going through a lot of change in the way we operate,” Mr Peirson said.

“The challenge at the moment is that we can’t deliver our service in a ‘the lawyer says no’ way. It’s about continuing to operate in the right way, but with a set of regulations and rules that aren’t really tuned into the digital age.

“It’s very challenging for the team but also really exciting. There are few industries that are so heavily regulated and regulated in a way that has such serious consequences.

“We don’t want to be running against where the regulator is on particular things but there are ways and means of charting a path that gets a good outcome.”

There is no question that digitalisation is changing the face of banking as we know it. The rise of financial technology is promising to revolutionise the way in which we apply for credit, cutting decision times from weeks in some cases down to minutes, while a growing reliance on mobile and online banking has led all banks to rationalise their branch networks.

While for CYBG that has led to the closure of dozens of branches and the loss of hundreds of jobs, Mr Peirson said the challenge now is to come up with a model that serves all customers’ needs, something the group describes as its “omni-channel approach”.

“We as a business have talked to the market about our ambition in the digital space in terms of how we make the bank work better for customers,” he said.

“We have to re-engineer the bank so you can go into a branch, ring up or go online and we can deliver across a range of different products.

“That requires a lot of work from a technical point of view and from a product development point of view. It also involves a lot of work in terms of our team’s support to make sure its sits within the rules and the law in a way that still works for the customers.”

Despite its pedigree, in many ways CYBG is a new entrant to the market. Though it can trace its roots back to the launch of Clydesdale Bank in 1838, the organisation in its current form is less than 18 months old, having spun out of former parent National Australia Bank (NAB) and floated on the London and Australian Stock Exchanges in February 2016.

For Mr Peirson, advising on the transaction was career defining.

“NAB had looked at trying to solve what to do with the business in London for as long as I could remember and there had been lots of ideas,” he recalled.

“The year before they had floated their US subsidiary, Great Western Bank, in a similar way to Lloyds TSB – they separated the businesses, sold part then sold the rest at a later date. There was a strong view from NAB’s side that that wasn’t necessarily the best thing to do for this business, to have a period of time with old and new owners.

“We came up with a structure that allowed for a complete division where they sold 75 per cent of the holding in us to existing shareholders then the investors could decide themselves if they wanted to stay in or sell out. The remaining 25 per cent of the ownership was then floated in London.

“It was quite a complex structure but what it achieved was that on February 3 [2016] we were completely separate.”

Although the London listing was delayed by a day after an intervention from a credit ratings agency, it went ahead with the shares priced at 180p, which was at the lower end of NAB’s target range of 175p to 235p. Since then, the shares have risen by 48 per cent to 267p, with the banking group’s market capitalisation rising from £1.6 billion to £2.4bn in the process.

Not that the success will allow CYBG to rest on its laurels any time soon. With new entrants to the banking sector meaning traditional players are being pushed to innovate from outside as well as from within, the group expects to continue having to transform itself for some time to come.

“The banking environment beyond the next couple of years, people will have to catch up to,” Mr Peirson said.

“We have a lot of competitors coming in who are not in the financial services space and we need to be able to keep up with the service they provide.

“That will be a constant journey. The pace of change and innovation will continue.”