State Street CIO: Banks Need Fast Learners
“Digital” is the current hot buzzword in banking. But going beyond the buzz to truly deliver on the promise of the digital enterprise is going to require a huge effort from financial services IT organizations, which will have to integrate disparate businesses, find efficiencies, and deliver products and improved processes faster than ever before. That’s according to Chris Perretta, EVP and CIO of State Street, who participated in the Technology Keynote session at this year’s Sibos in Boston.
Making the concept of the digital enterprise real means more than automation, Perretta emphasized. “The digital enterprise is fundamentally different [from] the compliance and control environment that we operate in,” he said. “Probably the biggest challenge for IT professionals is to build an ecosystem that is a single source of information for the enterprise, regardless of who created it. The IT perspective is that we tend to focus on the tactical requirements of day-to-day. But we have to have a holistic view. [It is] another challenge for IT teams to build the structures, mechanisms [and] ecosystem that offer a single source of information.”
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One of the key factors driving this shift is mobility and the ubiquity of information access, Perretta pointed out. “At the end of the day it is the consumerization of technology, the expectation that if I can see it at my desktop should be able to see everywhere,” he said. But because of the reality of the presence of many legacy applications at most financial services firms, “for established organizations that’s not so trivial.”
Another aspect of this emerging holistic approach to IT is security, Perretta noted. For many years, he said, “The industry treated security as a second thought. Now it’s at the top of the list,” adding that security “is a very big deal at StateStreet.” Perretta stressed how important it is for banks to build a strong security foundation into their infrastructures, because “it’s hard to go back and superimpose a layer of security” and that trying to do so “is fraught with opportunities for defects.”
However, thinking this way requires a different kind of mindset from what traditionally has been valued in banking, Perretta acknowledged. “In financial services in general, we’re really focused on function and feature – get capabilities in and do it quickly because we were chasing revenue,” he said. This means there was relatively less consideration of factors such as privacy, re-use, or data replication. “These all have to be built into more rigorous planning process,” partly because they now are board-level concerns, Perretta said.
But this can’t come at the expense of speed. “It all has to be part of an overall technology strategy,” Perretta said. “It has to be a holistic approach to planning for systems that are growing in capability faster than our strategy cycle.” These expanded capabilities become even greater – “almost infinite” – when the cloud is factored in, he added, asking: “We now have access to this data – what are we capable of doing?”
One challenge that this approach can help companies such as State Street address more effectively involves regulatory requirements, as well as the need to balance compliance demands with innovation imperatives. It’s critical to develop compliance systems that can be leveraged for other business needs, Perretta said. “One of the things we can do as IT professionals is say, ‘What core capabilities do we need and how can I modularize them to have set of capabilities to respond to the existing regulatory and commercial environment, and then rearrange them [for future requirements]?’”
This ability to rework existing systems in order to respond to new requirements or opportunities is a benefit of “great design,” he noted. “Those requirements are not going to stay static,” he added. “They are going to grow in complexity and be different around the world. We have to be more all-encompassing in how we set strategy. “
Ultimately, Perretta said, “What’s going to happen is that what IT does and what the business does will merge together. IT doesn’t support the business process – it is the business process.” And nowhere is that reality more pronounced than in financial services, he stressed: “That’s where you have to consider IT processes as the business processes themselves.”
At the same time, this new reality has significant implications for the ways banks staff their organizations and develop that talent, according to Perretta. “The idea of going to State Street and working there for 30 years – frankly, that social compact has been broken. So now we have to attract young people on the exposure they will get to a range of opportunities,” he said. This also pertains to non-millennials: “Your very skilled resources could go anywhere.”
The theme of taking a holistic approach to IT also applies to the people working within financial services IT organizations, Perretta explained. “We have to have a holistic view of what it means to be an IT professional,” he said. While there are new skills and capabilities, it’s less an issue of credentials and more about peoples’ ability to adapt and learn. “In an environment where everything is changing – it’s more a question of how you learn than what you know,” Perretta stressed. “That’s a real mind shift; we tend to want people who know everything about the financial products and the technology. But technology is moving so fast it’s only good for 18 months, anyway. We’re looking for five-legged sheep, but those people don’t exist.
“That’s why working across the business is more important,” Perretta said. What bank IT organizations need are “people who can assimilate and understand complex problems and learn very rapidly. That’s probably biggest challenge we have.”
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio