It was time to update the directors on a three-year initiative to modernize First Niagara's IT infrastructure. Naturally, Inder Koul, the chief information officer, was there. But so was Mark Rendulic, his counterpart who heads the $39 billion-asset Buffalo bank's retail division.
Koul and Rendulic had agreed that the latter executive would brief the board on work to ease customers' ability to open accounts online. The assessment he delivered: The implementation, which the teams had completed in nine months thanks to their decision to first design the user experience, was the best he had seen in his 30 years in banking.
"He really believed it because his peers in the industry were telling him it normally takes 18 months, but because we had done this proactively we were able to do it very well," recalled Koul, who joined First Niagara nearly three years ago from Huntington Bancshares and who attributes the win to a culture of collaboration set by Gary Crosby, First Niagara's CEO, and enshrined companywide. "I think it's probably a joint ownership that is required, expected and subscribed to here."
Ask CIOs throughout the banking industry these days about how they tune the work of their organizations to the priorities of the banks that house them and you are apt to hear similar accounts of linkups between technology and business groups that reach from the front of the bank to the back office. The cooperation reflects several realities, including banks' push to build platforms that meet the expectations of the growing number of customers who prefer to bank electronically.
It also reflects an acceleration of innovation that necessitates CIOs who can catalyze technology departments to address the demands of a marketplace moving in double time while ensuring their institutions continue to ensure security and reliability, as well as the growth that investors demand. Banks also face a wave of competition in lending, payments and other businesses by competitors who are flush with capital and unburdened by a need to run mainframes.
Amid the vortex, CIOs find themselves looked to by colleagues across the bank as leaders responsible for the combination of teamwork, funding, talent and innovation needed to propel their banks to meet a higher standard of customer experience. And they're working to undo a perception voiced by at least some bankers at American Banker's recent Digital Banking Summit that the IT department is the department of no.
"Look at yourself as the CEO of a fintech company and that company's job is to piece services together and deliver them to the bank's customers," says Kwafo Ofori-Boateng, IBM's global director of front office transformation for banking and financial markets, who advises technology chiefs at some of the nation's biggest banks. "That has organizational implications."
Many CIOs are addressing the challenge by, among other things, fusing management of technology and business with the goal of matching the two as closely as possible. At SunTrust Banks in Atlanta, chief technology officers who report to the CIO belong to each of the $190 billion-asset bank's mortgage, consumer and private wealth, and wholesale divisions, as well as to its infrastructure, shared services and data units.
"We've gotten to the point where each of our CTOs play a lead role in helping to build the strategic plan for each segment," says Anil Cheriyan, CIO of SunTrust, who since joining the bank three years ago from IBM has tightened ties between the roughly 8,000 people who work in the technology and operations organization and their peers in the bank's business groups. "Each of the business leaders run their own technology investment portfolio and supervise where they are in that journey in terms of improving technology, and our CTOs are actively engaged in managing that for them."
Besides embedding technologists in each of the bank's units and immersing himself in strategic planning, Cheriyan belongs to SunTrust's investment committee where together with the CEO, the chief financial officer and the chief risk officer he aims to ensure that investments in technology anticipate demands of clients, satisfy regulators, and ensure upkeep of systems and software. "There are heavy debates, obviously, going on in terms of where we should be spending our dollars most wisely and by which segment," Cheriyan adds.
Paul Obermeyer, CIO of Comerica in Dallas, oversees roughly 2,800 people who span technology and operations, including procurement, real estate and security. In addition to meeting regularly with his fellow executives at the $69.3 billion-asset bank, Obermeyer has worked to transform the organization he runs into one that measures the services it delivers rather than the functions it spans.
As Obermeyer describes it, the functions in his group used to operate independently of one another despite some activities, such as check processing, entailing services from courier processing and application support to reconcilement that encompass several domains. "Instead of looking at these operations as independent functions, we've created integrated services teams to deliver the services our internal clients consume from us," Obermeyer explains.
That enables Obermeyer and his team to have what he terms "a different kind of discussion with our client partners across the organization" about their expectations for technology and how his team aligns with the various units around business goals. "If we're investing in a customer relationship management system, for example, it's not the technology that's important but rather the outcome: The investment should improve productivity, and thus we should generate more loans per relationship manager," he explains. "That translates to something that will improve the life and lot of our client and also drive shareholder value."
The configuration of IT departments to complement business units also hastens the pace of innovation by slashing the time between identifying the need for a product or service and delivering that product or service to marketa concept that technologists tend to refer to as agility. "That means collaboration with business partners to move from nine- and 12-month release cycles to three- and four-week release cycles, as well as the skill sets, expertise and development operations required to make that shift," says Scott Lieberman of IBM, who advises CIOs on initiatives that make the experience of banking more interactive.
At Bank of the West, collaboration between the technology team and the group that oversees digital channels has allowed the $76 billion-asset institution to revamp its mobile app, online account opening, website, and online banking services all within the past three years. The results flow from both an ability to tap into the demands of customers and a willingness by the technology team to refine repeatedly, according to Kirsten Garen, the bank's CIO, who supervises about 550 employees and several hundred contractors. "We have these features and functions based on research that the digital organization did in partnership with us, and we adjust the road map," she says.
Bank of the West also has an innovation council that cuts across functions "to think about how you can create different kinds of customer solutions" and to build prototypes for products and services that can fulfill those goals, said Garen, who notes that the collaboration such initiatives can produce also eases the bank's ability to tackle tougher challenges. "If you can come up with things that allow you to interact with different business leaders and that are truly cross-enterprise and fun, forward thinking and embraceable, then you can get to the topics that are more difficult, like infrastructure renewal," she adds.
The practice of working to move successively closer to a result carries through to the planning process at Bank of the West, where, similar to SunTrust, technologists embedded in the banks major lines of business work closely with bankers to create what Garen describes as "multi-year road maps" of the bank's technology needs. "It's very much an ongoing process that allows us to partner in a very different way with these businesses," she says. "Without those people, you have many business leaders coming to a scarcity of tech leaders. The throughput can be terrible. Here we have one representative for that whole line of business to help us prioritize and respond in a more effective way."
To anticipate the evolution of services such as treasury management, First Horizon Financial in Memphis, the parent company of First Tennessee Bank, twice yearly convenes a council of its corporate customers. "We do a lot of work to try and make sure that whatever suggestions we get from them we prioritize internally," says Bruce Livesay, who as CIO oversees a technology and operations organization of about 1,200 people at the $26 billion-asset bank.
As Livesay sees it, First Horizon's size also enhances the bank's ability to innovate. "We're small enough to be flexible and nimble, so that if we see something that is becoming table stakes we can make a decision to include those features or functions," he says. "The flip side is we're large enough that we have the necessary level of investment so we can stay current on technology and trends. So we're kind of in a sweet spot where we can move and make decisions quickly."
Both Cheriyan and Koul, who leads a department of about 350 people at First Niagara, say that innovation flows from a willingness on the part of banks to test cheaply and quickly, and a commitment on the part of technologists and bankers to developing platforms and programming interfaces before building out features themselves. "Our attitude is to start with a minimum viable product and to build on that over time letting people see what the outcome should look like," Cheriyan says. "Are we great at doing that across the board? No, but I think we're improving."
The collaboration also helps to assure that business units know the consequences of decisions. It may be one thing to agree on principles or to share goals but another when it comes to choosing one investment over another, notes Marc Cecere of Forrester, who advises CIOs and their business partners to delineate as specifically as possible the outgrowths of their choices and to prioritize among their priorities. "Force your CIO to help you understand the consequences of your decisions," Cecere advises bankers. "You need to know what the benefits are but also the downsides."
SunTrust views the heads of each of its business units as chief executives of their domains, according to Cheriyan. That means they are responsible for everything from revenue and risk to human resources and technology, which cannot be something the CIO alone handles, he says. The intensification of competition from new entrants means that bankers have to be at ease with technology, too.
"You have to own your technology," Cheriyan advises business partners, while underscoring the CIO's share of responsibility for that endeavor. "It's your infrastructure, it's your mandatory spend. Both players need to raise their game up a little bit and act like business leaders and take ownership at both ends."
The dynamic of work between IT departments and their counterparts means the role of the CIO is evolving, too. Garen says her colleagues turn to her to educate them about trends in technology and how those developments will impact customers. "We've had some really good conversations about where financial services are going in terms of public cloud versus private cloud, what that means, how it would work, and how they can feel confident," Garen says. "The business guys see that tech fuels their business and ability to increase revenues and cut costs, and they want to spend time to be educated."
To Livesay, the conversations between CIOs and their colleagues also reflects the evolving nature of bankingwhich he describes as being a business of "information management"and the importance of listening. "If you view the role as a relationship role it makes a huge difference in your ability to influence and to maintain alignment," Livesay says.
As the influence of CIOs waxes, their paths are changing too. According to IBM's Lieberman, a CIO has to "wrap together everything from understanding what's going on in the digital startup world, to the development methodologies in engineering, to what's happening across industries." The result, says Lieberman, is a shift in which CIOs are starting to lead businesses or become chief operating officers. Fifth Third Bancorp in Cincinnati recently named as CEO the bank's COO, who joined the bank in 2003 as head of IT.
Whether they're aiming for the top job or not, CIOs stand to benefit from that mind-set when it comes to balancing demands that range from aligning with businesses and boosting profitability to safeguarding systems. "Put yourself in the shoes of the CEO or the board, or a client or a teammate," says Cheriyan. "Think about your role in their minds, and always have that as your governing force."