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Management Strategies

04:31 PM
Lisa Valentine
Lisa Valentine
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Northern Trust’s Jana Schreuder Discusses The Challenges of Growth and Globalization

Schreuder focuses on keeping Northern Trust's two distinct businesses — institutional and private wealth management — integrated and in lockstep with the organization's strategic direction while dealing with the challenges presented by growth and globalization.

BS&T: What are the biggest changes you have seen in your 27 years with Northern Trust?

Schreuder: There have been two major changes: computerization and globalization. We used to communicate with our clients without the aid of computers; it was very much an interpersonal and paper environment. We now have to work to personalize how we communicate over the wires and make sure that technology still conveys that very personal relationship [on which] we've built our business.

The other shift is globalization. This organization has transformed from a national, predominately Chicago-based institution that played internationally into a true global firm. Globalization has enabled us to continue our growth and changed how we organize to lead our company.

BS&T: Can you describe Northern Trust's markets?

Schreuder: We serve both the institutional market and the private wealth market, but we support both with a common business model and one global operations and technology platform. That structure is a little different from our competitors. There is a tremendous amount of synergy in terms of investment needs and information desired by these two very distinct markets. We capitalize on those synergies.

BS&T: What's your reporting hierarchy?

Schreuder: We have a relatively flat organization for a global firm. I report into the president [Rick Waddell] of the organization, along with the business presidents. The support functions — such as legal, risk, compliance and financial — report into the CEO and chairman [William A. Osborn].

BS&T: Is IT centralized or decentralized?

Schreuder: We are both centralized and decentralized. Operations and technology is predominately centralized — we decide what we do, how we do it, when we do it, and what type of talent and resources we need to do it centrally. We then execute locally or regionally. Our CTO [Nirup Krishnamurthy] serves as a practice lead, and we have regional executives to carry out the local execution for that particular market, client and regulatory environment.

It's essential to do it this way because our model is so integrated with the business. All of us at Northern Trust exist to service the client, so we structure the technology and operations group to take their direction and guidance from the business. Throughout the planning process, as well as through the ongoing running of the day-to-day business, we make sure that our operations and technology leadership is in constant sync with the leadership of the client-services entity.

BS&T: Can you provide an example?

Schreuder: Each of the chief operating officers of each of the businesses makes decisions about how to spend our capital. The businesses have their ideas of what they need to do, yet we work together to make sure we are synergistic as we spend that money, depending on what is best for the customer and the client. That avoids competition and makes sure that the best decision is made and clear direction is given to the technology and operations staff.

BS&T: What technology challenges do you face?

Schreuder: I'd like to share three major challenges: growth, globalization and the need to run a 24/7 operating model.

Given that we are growing rapidly, we need to spend a fair amount of time ensuring that our infrastructure can accommodate that rapid growth smoothly. But we also need to make sure that we are thinking far enough in advance to sustain the infrastructure into the future. We are constantly reviewing our architecture and laying out projects not just for this year and the next couple of years, but projects we know will support our growth rate in five or 10 years.

Our global expansion has been a huge part of our success and will be an incredible part of our growth going forward. The challenge is to design our architecture not only to comply with the different currencies and local markets we have to deal with, but with the growing and rapidly changing regulatory environment. We may do the same function in several different countries, but regional or local regulations may require a different twist on how we process a particular function. Growth and globalization are driving us to continue to perfect our 24/7 operating model and support a platform that runs multiple end-of-days and real-time activities.

BS&T: What is Northern Trust's technology platform?

Schreuder: We have a proprietary platform that is integrated into our business model. We have expanded this foundation over the past 18 years. We have centralized databases and common delivery platforms to exchange information with our client base and other interested parties.

BS&T: How are regulatory concerns affecting your technology decisions, both domestically and abroad?

Schreuder: Everyone in our institution has long been focused on regulatory requirements and compliance, but the pace of change has accelerated, and our global footprint serves to continually sharpen our focus on both processes and technology solutions to satisfy those regulatory requirements. We've seen a bit of a shift in how we manage our IT portfolio. Five or 10 years ago you didn't make decisions based only on regulatory requirements. Now, in addition to process automation and product innovation, we are developing more technology and implementing more processes as a result of regulatory requirements.

BS&T: How does the IT organization at Northern Trust collaborate with the rest of the organization?

Schreuder: We have two client-facing business units that clearly need to drive the strategic plan for the organization. As we go through the planning cycle and revisit what we've done and look at what our clients, the industry and the market are telling us for the future, worldwide technology and operations is at the table helping to formulate that strategy and execute it. We view technology and operations as a part of the business.

BS&T: What organizations — financial institutions or others — do you view as your key competitors?

Schreuder: From an institutional perspective, it's a small world — State Street (Boston), Mellon Financial Corp. (Pittsburgh), Bank of New York (New York) and JPMorgan Chase (New York) are some institutions we benchmark ourselves against. It's a very different scenario in private banking in that the market is much more fragmented. Everyone wants to manage the money of wealthy individuals; you can look at every broker and consider them a competitor.

BS&T: Are Web-based tools important to the business?

Schreuder: Absolutely. Our Passport product is on our online window for our clients. It's a common delivery platform for both institutional and individual clients that they can customize. A very wealthy family doesn't have the same needs as a pension fund program manager, but we can give both access to the tools they need and make them easy to navigate. Our clients help determine how we develop these tools.

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