Bank of America’s global head of technology and operations discusses the lender's technology priorities and explains how simplifying and consolidating its systems will enable future innovation and growth.

If anything underscores the crucial nature of information technology to banking operations, it is the growing numbers of executives crossing over from other parts of the business. As a former head of corporate banking, Catherine Bessant, global technology and operations executive at Bank of America (BoA), typifies this new breed.

Rather than being a hindrance, though, her non-IT background is something Ms Bessant sees as a definite advantage. “I don’t know how I would do my job if I didn’t have experience in the businesses, and I think that’s increasingly true in technology,” she says. “As a discipline, every element of how we do technology is changing so rapidly that the issue isn’t – as it was when I was coming out of college – can you programme in Cobol [common business-oriented language], but do you have the critical thinking and understanding of the business to set technology strategy, and think about what development capabilities you need in order to execute it.”

Setting strategy

For BoA, she says, technology priorities are fourfold. The first is ensuring that platforms run successfully and reliably, that opportunities are capitalised upon and new ones created for the future. Second comes the reduction of risk, whether it be the day-to-day operating, execution and platform varieties, or ensuring that business and client revenue streams are optimised, and information security technology is up to scratch.

Third, simplifying and modernising the bank’s technological foundations is also hugely important, adds Ms Bessant. Currently, she says, the bank is operating on different tiers of system. “Some parts of our organisation operate on state-of-the-art, world-class platforms; some operate on effective but older, complex platforms that require some heroics from staff. We want to eliminate as much valueless complexity as possible.” Doing so is not, of course, a glamorous job. But by reducing the number of applications, the complexity of the vertical stack and such, the results can be huge.  

Last but certainly not least comes improving BoA’s competitive cost position. This is not always a case of a race to cut expenditure to the lowest possible level, says Ms Bessant, but rather ensuring that investment is directed to where it has most value, and that behind-the-scenes operations are as efficient as possible. “How we run our internal risk reporting is not important to our clients, but making sure we do that in a way which is amazingly efficient is important to our regulators and shareholders,” she says.

Many of the priorities are shared across just about every institution, but when it comes to simplifying and modifying technology, BoA’s acquisition-based growth strategy has complicated matters. “An enormous amount of our IT complexity is a result of how we’ve grown,” says Ms Bessant. Also, new purchases have led to multiple systems all being operational at the same time. In the early 2000s, for example, she says, BoA had peaked at eight different automated clearing house payments platforms, and it is currently in the process of consolidating down from six collateral management systems.

Sometimes, however, this strategy has worked to its technological advantage, adds Ms Bessant. The firm’s commercial and corporate banking CashPro portal was acquired along with Illinois-based LaSalle Bank back in 2007.

Consolidation and innovation

BoA has not been in acquisition mode for some time now and much of this integration work is nearing completion, clearing the way for a focus on the future. “As we continue to complete transitions and simplify and modernise the foundation of what we do, we will increasingly turn our attention to more classic innovation… which is exciting and scary all at the same time,” says Ms Bessant. “The work we do now is around optimising the known; this will be work around the unknown.”

Innovation strategy will be drastically different depending on area of the business, with capital markets and consumer banking at opposite ends of the spectrum. “In capital markets, the innovation has to be quick; time from concept to market has to pretty much be zero or there’s little competitive advantage,” says Ms Bessant, who describes the process as “a series of staccato rapid-fire small changes at all times”.

Where a trader will execute countless trades in a day, or week, and be willing to try myriad experimental strategies and methods to get an edge, a consumer banking customer may only renew a credit card once every few years, or apply for a mortgage two or three times in their life. As a result of this, and of the fact that consumer operations are conducted on an incredibly large scale, development on this side of the business has to be more deliberate. Otherwise, as Ms Bessant puts it: “If something is off by an inch, by the time it gets to market it will be off by the Grand Canyon.”

When it comes to consumer banking innovation, Ms Bessant says the priorities will undoubtedly be on bringing banking to clients and customers in the course of their day-to-day lives. In a word: mobility. The bank already has apps for Apple’s iPad and iPhone, Kindle’s Fire and devices running on Google’s Android system, but she says that there is more to come. “There has to be a transformational bet [in mobile technology]. What that is I don’t exactly know right now, but some of the big bets will certainly be there."

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