The Right Technology at the Right Time and Price

When Greg Carmichael left the manufacturing sector to join Fifth Third Bancorp ($106.1 billion in assets) as CIO in 2003, he not only had to learn an entirely new set of acronyms, he also had to quickly transition to an environment with high transaction volume that requires the utmost in security and recoverability. Now COO of the Cincinnati-based bank, Carmichael says he's focused on taking everything he's learned as CIO and applying those lessons to drive more value for customers and grow the bank.

BS&T: Do you enjoy working in financial services?

Carmichael: Coming from the manufacturing sector to financial services is exciting. In financial services you're selling information, so technology becomes your delivery and service channel. Technology can make a powerful difference in a bank's bottom-line and top-line performance. It impacts the way you service your customers and what products you offer.

BS&T: How is financial services IT different?

Carmichael: The technologies used in banking definitely create challenges, especially in the areas of reliability and recoverability. Manufacturing runs a big suite of enterprise software, so you're only talking about securing a single infrastructure. In hindsight, it was relatively easy.

In banking, you don't have a single system that can run a large bank, although you can find such a thing for smaller banks from vendors such as i-flex solutions [Mumbai]. I learned this the hard way as I scoured the universe for a "bank in a box." We have commercial systems and retail systems, and we run Fifth Third Processing Solutions (FTPS). Managing that varied environment with so many moving pieces is difficult.

BS&T: Does Fifth Third have a CTO?

Carmichael: Our applications, communications, data centers, database management and support are centralized and run by a gentleman who heads up the infrastructure organization. He's the closest thing we have to a CTO.

BS&T: Has IT always been centralized at Fifth Third?

Carmichael: Yes. We don't run any distributed operations in the bank corporation -- everything is under one organization. The organization is very supportive of that structure. We've got tremendous leverage, and our priorities are in lock-step with the businesses.

BS&T: How do you ensure alignment between the business and IT?

Carmichael: Our line-of-business CIOs work toward that every day. They are responsible for staying abreast of their industry, benchmarking us twice a year and making sure we have a three-year strategic plan for each line of business.

I can tell you the top 10 initiatives for each line of business, what it's going to cost, where we are in each project and what the value is for each initiative. It's tough to get there, but the crown jewel of IT is the relationship we have with our business partners. It's better than I've seen anywhere.

BS&T: What technology challenges do you face?

Carmichael: Making sure we have the right tools and the right products to serve our customers at the right time is always a challenge. You're always walking a line between what you want to have and what you really have to have to be competitive. It doesn't do any good to have a great back-office infrastructure if you don't have products that make customers want to do business with you.

BS&T: What role does protecting Fifth Third's brand play in your technology decision making?

Carmichael: We try to protect our brand with the technology investments we make. No longer do criminals have to come into the bank to rob you, and that creates a certain level of risk. A lot of what we are doing is ensuring that we are protecting our customers' data by encrypting data in-flight and at rest. Even if criminals get through our network wall, our data is encrypted.

These projects don't create revenue for us, but if we are compromised, our credibility and reputation of being a secure bank is at risk. Protecting our data and our applications, and being able to recover them, scale them and identify fraud is more daunting than it has been in the past.

BS&T: What about breaches outside the bank, such as at a merchant point-of-service (POS) device?

Carmichael: We monitor all card transactions online in real time -- something we weren't doing 12 months ago. If a POS transaction is done in Ohio and another is done in Florida or Europe within a short time frame, we see that immediately. We look at every transaction that happens in our banking centers, our call centers, Internet banking and ATMs, and flag any that are suspicious. We also have systems to monitor internal fraud. Unfortunately, you can't stop all internal fraud, but how fast you catch it is very important.

BS&T: What are your major areas of focus for IT?

Carmichael: We're focusing on ensuring that we have the right technology platforms in place. For example, we're upgrading our treasury management platform to offer a more-integrated suite of solutions so we can become a complete payments provider. Bundling payments solutions to our customers is a huge revenue opportunity for us. We're also offering new products around healthcare and medical lockbox. On the retail side we're introducing 20 new products that we believe will drive more value for us. Because of the technology we have in place, we're putting those products online within weeks where it used to take us months to do so.

We've also implemented a wholesale brokerage Web site for our mortgage brokers so they can do business with us in real time. With a decisioning engine for small business loans, we can turn a loan around in minutes as opposed to days.

BS&T: Do you develop your solutions in-house?

Carmichael: Our preference is always to buy a packaged solution, and we typically buy about 90 percent of what we need. We do build on top of and enhance what we buy. We think that gives us a better competitive advantage while allowing us to keep up to date on releases.

About two years ago we partnered with NCR [Dayton, Ohio] to build our electronic deposit platform. We have an image-exchange engine that processes all images, whether they come from an ATM, a branch or a commercial customer.

Ten years ago we built more than we bought, but that has changed in the last five years.

BS&T: What other vendor relationships do you consider important?

Carmichael: Our partnership with IBM [Armonk, N.Y.]. In my past life I wasn't always the biggest IBM fan, but we have a great relationship with Big Blue. We partnered with them to implement our data center, which is a showpiece both for FTPS and IBM.

Our partnership with EMC [Hopkinton, Mass.] for mirroring and data replication also has been really strong. And we have strong application partnerships with vendors such as Fidelity National Information Services [Jacksonville, Fla.]. I've outsourced a lot of my application support for their applications.

BS&T: Who are your competitors?

Carmichael: We want to be more than competitive; we want to win the business. The people I want to benchmark us against are the big banks such as Citigroup [New York] and Bank of America [Charlotte, N.C.]. On the commercial side, we're competing against banks such as National City Corp. [Cleveland], U.S. Bancorp [Minneapolis] and PNC [Pittsburgh].