Bank of America Executive Places Importance on Risk Management as New Banking Technologies Emerge
Being the top technology executive for one of the biggest banks in the world can be stressful, but Cathy Bessant wouldn't have it any other way. Bessant serves as the head of global technology and operations (GT&O) for Bank of America ($2.18 trillion in total assets), where she is a member of the company's executive management team and reports directly to Bank of America CEO Brian Moynihan.
Bessant is responsible for delivering end-to-end technology and operations across the company. She also is responsible for managing the bank's global real estate portfolio and its relationships with vendors and suppliers. Bessant joined Bank of America as a corporate banker in Texas in 1982, and later was named president of consumer real estate and community development banking, leading mortgage lending and operations nationwide, as well as the full complement of Bank of America community development activities. Prior to her current role, Bessant was Bank of America's president of global corporate banking, a division of the company's global banking and markets business.
Noting that each line of business has its own CIO who in turn reports directly to her, Bessant says managing the technology and operations for so many lines of business at the Charlotte, N.C.-based bank is a little bit like performing air-traffic control. "We all report as part of a unified structure," she relates, adding that each business has the autonomy to align its operations to suit the strategy of that organization.
According to Bessant, this structure is the optimal way for her team to operate, given the vast and complicated nature of the bank's operations. "Each line of business in Bank of America is, in its own right, one of the largest businesses in its field," she comments.
To cut costs and create efficiency, however, collaboration is needed, Bessant acknowledges -- but only when it won't hinder the overall effectiveness of the bank's operations. For that reason, Bessant says, the different lines of business do leverage common architecture "when it makes sense." But they also can "customize where that has market value," she adds.
Simplifying and modernizing
As the bank looks to get more lean and efficient moving forward, Bessant explains, the technology and operations team continues to play a vital role in Bank of America's objective to simplify and modernize the company. For example, she says, BofA is in the process of reducing the number of data centers on which it relies, and has a goal to reduce the number of applications it uses by 50 percent by 2014. "It's not just about reduction," Bessant notes. "It's about changing work process so things can be done more reliably and efficiently."
Bessant and her team also must juggle the tasks of reducing risk and enabling the business strategies of the company while pursuing efficiency where possible. That mentality has spurred an overarching philosophy of "bringing tech and ops together," Bessant says. "I describe it as: If the clients are the heart of the company, we're the spine. What we do is highly complicated and large-scale, but it's really important to keep the whole system moving and keep it functioning."
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Sometimes this involves overseeing large-scale technology projects, such as a core systems replacement for the bank's west coast operations. The bank's California and Pacific Northwest branches, Bessant explains, ran on different core platforms, and her team was tasked with bringing those locations onto the U.S.-wide system. She says the project was of a "pretty big magnitude," since Bank of America has 11 million customers in California alone. The entire conversion was completed at the end of May.
"The conversion allows us to sunset numerous apps and thousands of batch runs daily," Bessant reports. "It will enable our customers in those areas to efficiently and effectively use our capabilities."
The consolidation also has the added benefit of helping reduce Bank of America's risk by getting those branches off of a "renegade platform," she continues. The tech and ops department is always looking to improve BofA's competitive cost position, or, as Bessant puts it, "Any time you run four of something, if you can run three or two of it without sacrificing speed, you should do it."
Bessant adds that the tech and ops organization plays a vital role in helping carry out the initiatives of Project New BAC, a cost-cutting initiative that CEO Moynihan announced in April 2011 to deal with the losses the company has experienced since its 2008 acquisition of subprime lender Countrywide Financial. "We have GT&O-specific ideas, and we also support the implementation of ideas from across the company," she says.
Part of that project -- and a necessity due to new financial services regulations instituted in recent years -- is reducing and managing risk, according to Bessant. This is especially vital for a financial institution that has a presence in many different countries, as BofA does.
"Risk management begins with information," Bessant notes. "The central component of risk management is judgment based on that information. The design of our systems enables us to be nimble and efficient in handling multinational jurisdiction. In some places our systems are what we want them to be, and in others we are making an investment to make sure they are where we want to be."
Bessant adds that being able to mine data effectively helps reduce ongoing risk and event risk. "Data means nothing unless it serves an actual, useful purpose," she says.
Helping Mobile Get Going
Like most banks today, Bessant says, Bank of America is heavily involved in mobile innovation. "We're thinking a lot about mobile devices and innovating in the mobile banking and online banking sectors," she relates.
But, Bessant adds, even though mobile banking is on the rise, it still has been adopted "by a relatively small percentage" of Bank of America's customers, especially in the corporate space. "Because of security issues for corporations and investors, mobile is not as applicable in wholesale spaces yet," she notes. "But it's much more prevalent in the consumer and wealth management spaces."
Bessant cites the emergence of mobile card swipe readers as a "game-changer" in the way consumers shop and how banks serve their customers. Noting the prevalence of devices from Square and other companies, Bessant says, "The only place we need cash is for gratuities. It's changed our businesses; we have an entire business that exists to go and sell card swiping devices and clear payments."
Bank of America also is embracing tech trends not only being driven by its customers, but by its employees, too. Bessant says the bank is embracing the "bring your own device" trend of employees using their own technology for work purposes. She notes that while many BofA employees already use their own mobile devices for work, an official BYOD policy has not been instituted across the entire organization -- yet.
In general, as the BYOD movement continues to gain traction in corporate America, Bessant says, she expects to see a trend toward "dumb smart devices" -- that is, devices that can access and use company data but not store it.
Since technology pervades almost every aspect of bank operations, Bessant emphasizes, she doesn't expect things to slow down any time soon. Because of the rapid rate of technological advancement, she says, "The game is really changing -- not just for our customers, but in how we do business."
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio