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National City's Joseph McCartin Says IT Is Key to Differentiation

National City's Joseph McCartin says IT is the place for banks to differentiate themselves in the eyes of the customer.

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For National City CIO Joseph McCartin, there's no better industry in which to work as an IT executive than financial services. However, banking wasn't where he developed a taste for working in IT; it was in the military. The former engineering major at Worcester Polytechnic Institute (Worcester, Mass.) and one-time Air Force captain says that when it came time to move on to the civilian sector, he still wanted to work with technology.

"I was in the military for eight and a half years," McCartin recalls. "But I was still an IT person. When it came time for me to leave, I asked myself where I could go where I could still work in IT." He says he almost immediately thought of financial services. "IT is integral to what financial institutions do. We don't really walk around with too many bags of money anymore, after all."

Joseph McCartin National City Corp.

In fact, according to McCartin, IT essentially owns the customer. "The customers really belong to the IT department once the salespeople are done opening accounts for them," he contends. "We hold the data, give customers online access [and] issue online statements," among other customer-centric functions.

It was in the early 1990s that McCartin received his first taste of financial services as CIO of Bank One Mortgage in Indianapolis. This was just when the Internet was starting to catch on. Since then, he notes, the industry has seen much change. But the Internet "changed the whole game [of banking]," McCartin says. "The Internet is particularly well-suited for the integration of products and services capabilities to make customers' lives easier."

McCartin recalls an article he read that said that banks went through a "boring phase" in IT in which they all offered pretty much the same products. "Today, though, we're moving to a more interesting phase," he asserts. "You are starting to see many banks truly focus on customers and find ways to integrate products and services. This is an IT story because it's totally technology-enabled."

Technology at National City ($140 billion in assets) has undergone its own transformation since McCartin arrived at the Cleveland-based bank. "National City's IT shop used an order-taker model in which IT would talk to the business and scribble down whatever the business side wanted," he relates. "But then the bank changed. We now use technology to unlock differentiation. We brought in serious IT folks to widen our aperture in understanding the business strategy and to do a good job at seeing the technology implications of a strategy."

As part of this metamorphosis, McCartin embarked on the ambitious project of replacing the bank's core systems. Rather than approaching this as a rip-and-replace project, however, he opted for a gradual refresh of the systems.

After assessing the bank's core applications and comparing them with National City's future needs, McCartin says, he saw a large disconnect. Although the systems the bank already had in place worked well, he relates, they just were not built with the flexibility needed to help a bank innovate in today's more competitive financial services marketplace.

"Rip-and-replace programs are horrifically dangerous with massive risk," McCartin explains. "Core renewals end up being dramatically lower risk to the business. We can pace out the timing of when we do the work. As long as you put together a good multigenerational plan of how we're going to change the systems we have, then you can stage the business to come along with you."

The refresh has been going on for about three years now, and McCartin says he is pleased with the progress so far. "Sometimes we'll pull a piece out and replace it with a commercial package or we'll pull out some antiquated code and recode it," he relates. McCartin declines to specify National City's technology partners for the initiative.

Rebuilding Business Analysts

To further whip National City's IT department into shape, McCartin instituted two programs around project planning and testing -- Requirements Management Methodology (RMM) and Testing Management Methodology (TMM). The RMM is essentially a playbook used by the bank's business analysts that offers a set plan on the specific steps to follow when working with a project team.

It came about after McCartin initiated a program to better evaluate the skill sets of National City's business analysts and empower them with a new set of skills -- such as risk management, eliciting requirements, quantitative skills, Six Sigma principles -- to create analysts who are more proactive. This training was vital to "rebuilding" its analysts since, he says, they used to follow an order-taker model. However, "In our new competency set, it was important to elicit requirements [from the business side] -- not have the business tell us how to build it, but to tell us what they're after," McCartin relates.

The TMM program was launched after the RMM was established. According to McCartin, the bank needed a more sophisticated testing capability for its systems and products. A TMM guide that includes specific deliverables needed very early in a project and specific activities that must occur to make sure the systems are tested was developed. "A big benefit is that we get a lot of reuse out of the testing [and] the scripts we have in place," he says.

Although it took a lot of work to get these programs off the ground, "The numbers have been great," McCartin offers. "The company's business analysts are really excited about the program because they see that we take these things seriously."

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