Wachovia’s corporate chief information officer views outsourcing as a partial solution to the slowdown in banking innovation resulting from industry consolidation. Dan Barnes reports.
What is striking when talking to Martin Davis, corporate CIO and executive vice-president of Wachovia, is that in his view the IT/business divide is a mere crack in the pavement. “We’re all on the same team – we may be performing different tasks but we all work towards the same goal,” he says.
His team – five CIOs covering specific business lines – are what many would call the ‘manufacturing’ division, looking at software and integration, with the chief technology officer function covering hardware and infrastructure.
Team at the table
Mr Davis does not believe that the term manufacturing sums up the full role that his CIOs play at the bank, however. He explains: “My team is also a critical part of product management, design and business solutions. The business has its requirements and we use our technical knowledge to address those requirements. But let me tell you, we are at the table with the business, making decisions.”
With about 2% of Wachovia’s 100,000 employees working in the CIO division to support the bank, Mr Davis believes it is crucial that staff are close to the business they work with because “having proximity shortens the learning curve into understanding the business”.
Many banks treat these areas as separate parts, even going so far as to make IT a separate services company. The unification that Mr Davis provides is so complete that it is difficult to apportion credit for success to one side or the other. “It’s often hard to say whether a solution is coming from the business unit or the technology section. What I would tell you is it is coming from the team.”
Channels of innovation
Clearly confident of his own team, Mr Davis retains an open view of third parties. “It is important to keep channels clear between us and potential sources of inspiration. One of my greatest challenges at the moment – and this afflicts the industry – is trying to maintain innovation. So I speak to other CIOs in my industry and from outside my industry. I speak to the major service providers and technology organisations to understand where they’re headed and also we share a huge amount of information internally,” he says.
The slowdown of innovation in banking technology, noted recently by The Banker’s judges in the 2006 Technology Awards, is probably a symptom of industry consolidation, says Mr Davis. Explaining that the level of change involved in mergers and acquisitions (M&A) activity has reduced breathing space for many IT functions, he sees third-party providers as a possible solution and certainly one that Wachovia will exploit to increase its own space.
“Each M&A situation is different and I don’t believe that you can build a system that serves you well in every one. Where Wachovia has a competitive advantage on every M&A deal is that we have the ‘cookbook’, if you will, of solutions,” he says.
“The capacity provided by our offshore service provider in the more traditional IT space will provide room for the in-house team to innovate.”
Outsourcing limits
However, Mr Davis does not believe that outsourcers can fully match his own team’s expertise. “To some degree, there is a limit to the role that I believe outsourcers can play in replicating the deep domain knowledge that my staff have.”
The true value of vendors is realised when new technologies come to market. For example, Wachovia has been a leader in adoption of grid computing (leveraging the total compute power of grouped servers or PCs to perform compute-intensive calculations) and has partnered with one vendor for half a decade in this area. When new opportunities arise, it seems likely that Wachovia will still be at the forefront.
“We’re flexible. I feel very comfortable saying there is not a solution that we can’t build. But we are also skilled technology integrators, and I am not opposed to purchasing commoditised components in order to build a system,” says Mr Davis.
“What we must understand are the trends that are taking place in the industry, so that we are prepared.”
CAREER HISTORY: 2003: Corporate CIO and executive vice-president of Wachovia
2001: CIO, commercial technology, Wachovia
2001: Senior technology officer, wealth management, Wachovia
1998: Senior vice-president and group executive, information services architecture & administration, Wachovia
1997: Senior vice-president and group manager, capital markets technology, Wachovia
1995: Senior vice-president and group manager, bankcard technologies, Wachovia
1990: Vice-president, application development & management, Wachovia
1985: Collections assistant, Wachovia Services
1986: BA in business administration, Winston-Salem State University
