The decisions that Cathy Bessant makes today in her role as global

TALKING BUSINESS
Tech that
The decisions that Cathy Bessant makes
today in her role as global technology and
operations executive at Bank of America
could shape the bank’s operations for the
next 20 years, writes Tom Groenfeldt
W
ith nearly 100,000 employees and offices
around the globe, Bank of America has one
of the largest IT organisations in the world.
Cathy Bessant, the bank’s CIO in charge of this
global team, is pretty clear on her priorities.
“The most important job we have every day is talent
— the attraction, motivation and retention of worldclass talent. The simple answer, when people ask how
you run an organisation of this size, is that I don’t.
The people who work for me do, and the people that
work for them do it in more depth throughout the
organisation.
“From day one, we have been focused on ensuring
the right talent and the right people are in the right
roles. If it is mission critical, we
need to have one of the top five
people in the world for that job
for the scale at which we run.”
Perhaps it helps that Bessant
did not rise through the ranks
of techdom. She started at one
of the bank’s predecessors in
Texas as a corporate banker,
then served in several roles,
including president of the
bank’s operations in Florida,
chief marketing officer and president of Global
Corporate Banking before taking the CIO role.
Marketing prepared her for a key part of her job —
talking to strategic partners and suppliers about
technology directions, learning how customer needs
are changing and then sorting through what the
businesses believe they want and need compared
with what she understands about customers and
clients.
“We must understand the business, the customers
and the marketplace. My experiences managing the
bank’s business in the state of Florida where we had
more than 800 banking centres, plus working in the
domestic and global corporate markets helped me
understand the end users.”
In today’s world of social media and widespread
availability of sophisticated technology, market
tolerance for poor service or substandard capabilities
is low, she says.
“One thing we focus on constantly is how to be
nimble enough and quick enough in a world where
failure to be quick risks disintermediation.”
This being banking, Bessant spends “a lot of time
externally with regulators and others who influence
the way we do our work because you can’t figure out
everything you need to know by reading regulators’
circulars”.
Rules on data protection and cross-border datasharing vary country by country. The bank’s focus
internationally is to make its processes work for
customers.
“Our presence outside the US is not heavy on policy
influence; we are more focused on how to make it
work than on how to change it. We are focused on
our customers’ commerce.”
One aspect of the CIO’s role
that differs from others in the
C-suite is that while her
colleagues are looking at a
three- to five-year horizon, in
technology the decisions made
today could shape the bank’s
operations for the next 15 to 20
years.
“We are in the process of
replacing our core credit card
processing platform,” she says
by way of illustration. “It is 30 years old and has
performed really well for that time.” The new one may
not last for 30 years, but part of Bessant’s job is to
make sure it is flexible enough that it does not freeze
the bank into rigid business processes.
The team historically inherited more than a few
outmoded systems through mergers and purchases,
but has aggressively prioritised work to replace,
integrate or improve.
Through its acquisitions the bank gained some
technology silos structured around products, rather
Photography: Jeff Cravotta
If it is mission critical,
we need to have one
of the top five people
in the world
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Spring 2014
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9
BoA’s evolution
Bank of America’s predecessor,
NationsBank, grew during the 1980s and
1990s through a slew of acquisitions
across the country from its headquarters
in Charlotte, North Carolina. Among its
larger acquisitions were Bankers Trust,
First RepublicBank, C&S/Sovran, MNC
Financial, Barnett Bank and Boatmen’s
Bank, as well as some significant regional
and super-regional players. In 1998
NationsBank bought San Franciscobased BankAmerica, which itself had
acquired several large banks in the West,
and then adapted its name for the new
company, Bank of America. After that, the
combined entity went on to buy several
more large financial institutions including
FleetBoston, credit card issuer MBNA, US
Trust and LaSalle Bank. At the top of the
subprime mortgage bubble it bought
Countrywide Financial, one of the largest
players in the mortgage market. Then,
during the financial crisis, it turned down
the acquisition of Lehman and, with
federal support, bought Merrill Lynch,
which had also made huge investments,
and suffered huge losses,
in the subprime market.
Bank of America
Headquarters;
Charlotte NC
than clients or customers.
Replacing them, or making them work
together, has kept Bessant and her team busy.
“Now much of our work is focused on
simplification. If we have one process, we are
going to use one platform. We must have one
way to open an account, although that is
different in corporate banking and retail. But we
are adamant about integration and horizontal
design as much as possible, because we live with
the results [of vertical solutions] every day.”
The bank has been good at integrating its client-facing
technology, she adds, and now it is catching up in the
middle and back office with a target date of 2015.
One of the things required of a successful CIO is
setting a technology strategy and holding focus.
“Setting a technology strategy, and sticking to it, is
innovation in and of itself,” she says. “It is very easy
to get distracted by shiny objects and by the
individual capability you are trying to create on any
given day.”
Project management
One result of dealing with the disparate IT systems
that grew out of the bank’s mergers and acquisitions
is that the tech team has become very good at project
management.
“The discipline it takes to merge companies
effectively is the same it takes to execute large,
complex projects. We have had to build that as a core
competency since the early 1980s. Now project
management is a defined role, and some of our very
best leaders do it. We hold with great discipline to our
tenets of project management, including a massive
amount of inspection. It also helps that we are an
organisation where people have grown up with the
notion that change must be managed, and it is not
something to run from or ignore in the hope
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everything will just work out.”
Underway over the next several months at Bank of
America is the conversion of the bank’s credit card
payment system, which will be the largest ever card
platform conversion, Bessant says.
Bank of America is also replacing its general ledger
with SAP, once again the largest ever such
implementation SAP has done.
Buying technology, when appropriate, is a key part
of the bank’s drive towards simplification, one of
Bessant’s key goals.
“In the past, our strong bias was to build our own,
and that was also the bias of a lot of the companies we
acquired. The challenge of proprietary platforms is
the cost of investment, the cost to maintain them and
the cost to implement new regulations and make
them contemporary for a changing marketplace.” It is
often far more cost effective to buy a system whose
development and maintenance costs are spread across
multiple clients. The bank will still develop its own
solutions, but only if they will provide significant
differentiation, or when building is faster or cheaper.
Security is a constant concern for the CIO.
“Information and data security are causing us to
rethink what we do in-house and what we do with
third parties,” she says. Given the bank’s size, third
party data hosting can be complicated. The bank is
very careful about third-parties that access its data
and it has strict rules about data leaving the bank.
“We have implemented a process, called ‘permit to
send’, under which no data leaves the firm without a
deliberate, risk-based decision made about the
prudence.” The technology and operations organisation
is in charge of data management at the bank.
“There is negligible data flow that we don’t touch or
manage, and the fact that we see it all is the first step in
managing it and enforcing really strict protocols.
Technology now makes a lot of that easier than it
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would have been five years ago when aggregated data
warehouses were clumsy and slow. Now architectural
capabilities make it possible to aggregate data in ways
that are efficient. We can secure our clients’ and our
own data without degrading the customer experience.
Customers want us to protect their information and
technology enables us to do that without creating
performance problems.”
With operations around the world, the bank and
its IT staff can learn from other countries. For
example, it is already familiar with chip credit cards,
since the bank has issued them in Europe for quite
some time, but just began offering them
domestically in 2012.
think going to the bank to make a deposit is a hassle.”
Bessant serves on the board of trustees at the
University of North Carolina Charlotte (UNCC),
which she says is one of the premier big data
universities. It keeps her abreast of technology
education, while she no doubt offers some advice to
the school on what skills are important.
Great technologists are problem solvers, she says.
“Code writing and technical creations are
important, but they are not the skills that will cause
someone to rise to the top of a technological
organisation. The great technologist can anticipate
or foresee opportunities and design to meet them.”
Now some of those technologists at Bank of
America are women. Bessant
says the CEO, Brian
Moynihan, challenged her for
being a believer in diversity but
with no women in top positions
on her team.
“Women are underrepresented in technology as
they are in science, math and
engineering,” she says. She
developed a plan to promote
women to top posts and added three women to her
leadership team, but her efforts have not stopped
there.
“We are doing a lot of work in our firm, and a lot of
work in my organisation, to increase the
representation of women in the highest levels. We are
really going about a fact-finding qualitative and
quantitative analysis to identify root causes and then
attack them with vigour. There’s no reason women
can’t be great technologists.”
Since 2009, Bank of America has doubled the size
of its IT innovation development budget, she says.
The overall technology budget has grown slightly, and
Code writing and technical creations
are important, but they are not the skills
that will cause someone to rise to the
top of a technological organisation
As a global business, Bank of America operates in
more than 40 countries “because that is where our
customers are. We may win a piece of business from a
US customer, but it could be to provide payment
services in Asia. We are global because our clients and
customers are global.”
Corporate customers are on the cutting edge of
wanting new capabilities from the bank, says Bessant,
while in retail banking, marketing expertise is needed
to create products that customers will want.
“We weren’t sure that customers knew they wanted the
ability to take a photo of their cheque to make a deposit,
but it doesn’t take long to find out that some customers
20
The number of years in an IT
investment timeline
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Tech that
Bank of America’s technology group has
four goals, says Bessant. The first is to
enable the business of the company – to
know that technology is not an end in itself.
A second goal is to reduce risk, including
operating risk and cyber risk, “but also
ensuring that what we do is both conceived
and performs in ways that reduce risk,
such as providing speed for real-time
analysis and decision-making.”
A third aim is to improve the bank’s
competitive cost position.
And the fourth goal is simplification and
modernisation.
“What I love about the technology
business is that these are not competing
priorities and are wholly integrated. Simpler
is always better, and better is always
cheaper and lower risk.”
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it is always a trick to balance remediation,
maintenance and the business-as-usual work with
innovation. She is fortunate to work for a CEO who
understands and pushes technology, she adds, and
who believes that digital transformation will be part
of his legacy at the bank.
Bessant knows to expect tough, intelligent questions
from her colleagues when she presents the strategic
plan. While five years ago many bankers might not
have been very tech-savvy, that is no longer true,
which creates its own challenges for a CIO.
“Today most of the line bankers I work with — and
I used to be one of them — are so much more adept
at their own personal technology than they ever were,
so it is much harder to manage the pace of change
because the pull is so aggressive.”
Part of Bessant’s job is educating people, sometimes
on the limits of what technology can do, sometimes
on the risks, and sometimes on the opportunities that
technology opens up for the business. IT has to
provide what the business needs, and it also has to
help business users understand what is possible,
because they might not have seen the latest in what
technology can do.
However, the bank is not in the habit of throwing
money at IT uncritically, as she learns at budget time.
“The budgeting and prioritisation process is
inherently one of the toughest things about being a
CIO.” Those who do it well find they are well
received, rather than hated, by the business, she adds.
The process requires openness and candour, sharing
prioritisation and reasoning, while making the tradeoffs transparent to the entire management team, she
explains.
“Done well, it accelerates great outcomes and
integrates the technology into the business.” She gets
frustrated at technology conferences where she hears
CIOs say they should be left alone to make the
decisions without end user participation.
Part of what makes a good technology organisation,
after all, is consistency of strategy and consistency of
leadership. That requires gaining and keeping the
trust of the business users, and shared ownership of
technology decisions across the management team.
Trust does not develop with black box decisionmaking, which she thinks is one reason the tenure of
CIOs is shorter than their technology.
“In some disciplines it matters less, but we are
making 10, 15 or 20-year bets. You can’t change your
point of view every four years when you are making
20-year decisions. Shared ownership of decisionmaking is better because it creates a more sustainable
long-term result.”
While the banking industry has been through some
difficult years and faces challenges in public
credibility, regulation and legislative changes, another
threat to Bank of America lies in the emergence of
competitors that are smaller, more nimble and often
less regulated than the banks, or not regulated at all.
“I can understand the mentality of people who say
let’s just hold on and let things settle down”, says
Bessant.
“But the moment we are in right now is the moment
that will define our industry. We should own our
destiny.”