BB&T Corp. (Winston-Salem, N.C.) has been on a shopping spree, acquiring 60 community banks and thrifts, more than 85 insurance agencies, and 35 nonbank financial services companies since 1989. Today, with $136.4 billion in assets, the financial services giant is looking instead at organic growth to fuel its success. Paul Johnson, BB&T EVP and CIO since 2001, is supporting that strategy by transforming the firm's IT organization into a "value center" more akin to a line of business and supporting the introduction of new products, including new supply chain and payment processing solutions.
BS&T: Compare the industry today to when you began your banking career.
Johnson: Competitive pressures have never been as intense as they are today. There are fewer players, but those players are stronger and pay more attention to client needs. And they are using technology to drive value.
In addition, the regulatory environment is the toughest it's been since I began my career 30 years ago, and I don't expect it to get any better. In fact, there will probably be additional regulations that will bleed off [additional] resources.
BS&T: What changes have you seen at BB&T?
Johnson: When I arrived at BB&T in 1999, we were a $43 billion organization. Today we have nearly $137 billion in assets. We've experienced explosive growth and have added a full range of complex financial services products. About three to four years ago we made a decision to slow down — but not stop — our M&A pace. Our strategy now is to generate value from the franchise we've created and to focus on organic growth. Shifting from being an M&A machine to focusing on driving organic growth requires a good deal of change in the organization, including people, process and infrastructure.
BS&T: Will you still look at acquisitions?
Johnson: We'll still do M&As where it makes sense, especially on the insurance side; one of our strategies is to grow our insurance business. But we are mostly focused on organic growth through channel integration, sales opportunities, and new products and services.
Johnson: We are here to provide value to clients. Generating value can mean making a process simpler for the client, reducing cycle time or increasing transaction speeds. Both SupplyChain 360 and Lockbox Web Exceptions streamline operations for our clients and provide them with better risk management and capital utilization. From a bank perspective, these solutions enable us to learn more about our clients.
BS&T: How is the technology function keeping pace with the strategic changes at BB&T?
Johnson: Client expectations for self-service have driven a lot of changes within IT. Since technology is directly touching the client, we've had to make changes in our technology infrastructure. We're also very excited about a multiyear transformation program we have just embarked upon that will change how we view IT at BB&T. Going forward, we want IT to be a value center rather than a cost center. In the past we've emphasized driving down IT costs, whereas now we want to use IT as a key operating leverage point to generate better economic value.
BS&T: Can you describe the transformation program?
Johnson: There are several broad components to the program. The first is creating the infrastructures needed to provide high availability and fast response to customers using our products and services directly. The second is risk management. The shift to electronic channels means there are a lot more opportunities for fraudulent activities. We're looking to strengthen and expand our overall risk management capabilities.
The third component is generating value through consolidation, integration, standardization and business optimization. We want to find ways to help BB&T run better, reduce costs and cycle time, and generate revenue through technology. We plan to devote a third of our resources to creating value.
The shift from expense control to value generation changes how you prioritize what you do, how you fund what you do, how you make investment decisions, and how you measure and manage your IT organization. You're creating an organization that looks a lot more like a line of business than a technology organization.
BS&T: How does IT play a collaborative role with the rest of the organization?
Johnson: We conduct business technology meetings with our business partners — they describe where they are going, and the technology group listens and provides solutions. Collaboration ensures that we are in lockstep with the business.
We have a centralized IT organization, and we look to see if we may have already solved a problem elsewhere within the organization. We can leverage a solution, no matter where the business problem resides.
BS&T: What is the BB&T culture?
Johnson: We have a vision to be the best financial services organization possible — the best of the best. We want to provide long-term value to our shareholders, and that drives how we provide services and conduct our day-to-day business.
BS&T: What skills do you look for in IT staff?
Johnson: Depending on the position, of course, there are technical competencies we need to hire. But what is most important to me are personal characteristics, such as intelligence, adaptability, business acumen and self-motivation. We have a core set of principles that serve as our operating model, and we try to assess how an individual will fit in and adapt to these principles through techniques such as behavior-based interviewing.
BS&T: What are some of those principles?
Johnson: They include fact-based decision making, reason, independent thinking, productivity, teamwork and mutual supportiveness. We also abide by the principles of honesty; integrity; justice, which is fairness in how we evaluate and how we reward employees; and pride, which we define as the reward you get from living up to your values.
BS&T: How do you motivate and retain staff?
Johnson: Motivation comes from within. That said, most people are looking for a pleasant work environment where they are challenged and empowered and feel connected to something larger than themselves. They should also be fairly rewarded for what they do.
BS&T: What has been your greatest career challenge?
Johnson: The CIO role is the most demanding and challenging, but also most exciting, role I've ever had. You have a view into all parts of an organization. However, with that comes great responsibility and a great opportunity to be able to drive value through the organization.
Name: Paul Johnson
Education: University of South Carolina
Other Financial Services Positions: Federal Reserve Bank of Atlanta, NationsBank, Bank of America
Hobbies: Hunting, tennis and reading