Inside BofA's IT Makeover

Sprawling is a word often used to describe the disparate technology organizations that reside in the many banking companies that have been assembled via acquisition.

But it's a word that doesn't begin to describe the organization Bank of America's Catherine Bessant presides over, an IT operation with dozens of data centers, thousands of different software applications, and more than 100,000 employees around the world.

Nor does the word streamlining do any kind of justice to the task that CEO Brian Moynihan has handed to Bessant: turning that far-flung empire into a truly integrated global technology and operations division.

Some 18 months into the task, she recalls how Moynihan described her then newly assigned mandate: "Think of GT&O as the spine of the company; your job is to make sure the spine of the company works in an integrated, cohesive fashion for customers."

Importantly, that means that getting smaller isn't the only task on the to-do list - along the way Bessant is also aiming to optimize resource allocation and usage, tighten up operations risk monitoring and controls, and improve energy efficiency.

Given the myriad regulatory, capital, and other challenges that have buffeted BofA in that time, the project perhaps understandably has flown under the radar of people outside the Charlotte company. But there is widespread agreement that such a project was, if anything, overdue.

"At Bank of America right now, because they have such a massive cost-cutting program under way, it's important for them to rethink technology, what they want and what's good for them. It's a major issue for the industry and for this bank," says Richard X. Bove, an analyst at Rochdale Securities.

For staffers, the sheer magnitude of the change underway - implementation is scheduled to be complete by 2014 - of course brings anxiety. And it's hard to see how operations would be immune from reductions in staffing that are occurring across the company. (Plans to reduce staffing by 3,500 were announced subsequent to the interview.) But not all on the sentiment front has been negative. A recent survey by a technology publication rated Bank of America among the best places to work in IT; the bank did not make the list last year.

In talking to Bank Technology News, Bessant, whose official title is global technology and operations executive, offered the first public under-the-hood look at the project, articulated a vision for where the IT operation fits in BofA's broader objectives, and discussed how even small decisions like restricting access to services like YouTube freed up surprising amounts of network bandwidth.

Centralizing Platforms 
The first piece of BofA's IT transformation - centralizing IT - is a particularly daunting task at the bank, which is still dealing with the technology it inherited with its acquisitions of Merrill Lynch, Countrywide, MBNA and LaSalle. The global tech and ops organization comprises 109,000 employees in 40 countries. For most major activities - card processing, payment processing, foreign exchange trading - Bank of America would like to use one platform across the entire organization.

In choosing which platforms to keep and which to discard, the tech team hasn't necessarily sought the most state-of-the-art systems. "The lens is, how can we bring the companies together with minimum customer disruption," Bessant says. The card processing platform chosen, for instance, belonged to MBNA, the bank holding company BofA bought in 2006. At the time, MBNA was the largest credit card issuer in the world.

In other cases, the bank has chosen the most technologically advanced system. For example, in the corporate and commercial space, LaSalle, a Chicago regional bank BofA bought in 2007, had a payment portal that surpassed anything Bank of America was using. Although the smaller bank had only 10% of the overall customer base and it was a huge transition, "we made that decision because the capabilities allowed us to leapfrog what we would have tried to build in the old Bank of America," she says. The work of selecting which major processing platforms to standardize on will be completed by the end of 2011, Bessant says.