Barclays, gearing up to drive more innovation, and thus profit, in its U.K. business is creating a venture capital-type unit.
According to news from Reuters, Barclays has been having a tough time boosting growth in the U.K. and is launching Barclays UK Ventures to turn that around. The unit will be led by Ben Davey, former head of Barclays group strategy. Davey will spend his time creating new business lines, promoting innovation and thus driving more returns.
Reuters reported Barclays plans to build a team that includes technology experts, software developers and entrepreneurs who will work in lockstep with Barclays’ U.K. businesses. They will also form partnerships or take equity stakes in tech companies.
“The way we will work as a team will look and feel very much like a startup or scale-up operation,” Davey said in a statement to Reuters. The newswire noted that Davey told The Financial Times the unit is aiming to add billions in revenue to Barclays by 2025 and that the unit will look at advanced technologies, such as artificial intelligence. The aim is to create at least one new product line that is transformational in nature.
The new unit comes just as Barclays announced earlier this month that it completed its “ring-fencing” project, an overhaul of the financial institution’s structuring to prevent some of the scenarios that occurred in the wake of the financial crisis. Reports in The Financial Times on April 2 said Barclays transitioned 24 million customer accounts and more than $350 billion in assets into an entirely new bank with its own capital requirements.
Known as “ring-fencing,” the strategy aims to separate bank assets from riskier operations at the bank and will be a requirement for the largest U.K. banks starting Jan. 1, 2019. The process involved separating its consumer banking units from its investment arm and separating services for large corporates and small businesses. Larger corporate customers will be managed via the non-ring-fenced bank, while smaller clients will be serviced by “Barclays Bank U.K.,” reports said.
Chief Executive Jes Staley told the publication the process was more complex than Brexit preparations. “This completes three years of work involving 2,000 colleagues and means we can now focus even more on enhancing services for our customers and clients, and on growing returns,” Barclays said in an announcement.