As high-tech electronics raise consumer expectations, the dynamic between bank and end-user has become more collaborative. Jim Ditmore of Barclays talks to Rod James about this changing customer relationship, the importance of operational agility and how IT has become inextricably linked with innovation across the banking sector.
The need to wear two hats has long been a major characteristic of the chief information officer's role. The holder has to combine a strong degree of technical knowledge with the ability to manage change across the entire organisation - a delicate balance of hard and soft skills that has become even more difficult to strike in recent years. Banks' product portfolios have become increasingly complex and global in scope, requiring automated systems that can negotiate a host of technological and compliance-related challenges. In addition, IT infrastructure, which was once mainly confined to the back office, is now moving into the shop window, making its reliability and range of capabilities an integral part of an institution's product offering.
Managing all of this is hard enough without the impact of the global recession. State bailouts and the acquisition and divestment of assets has meant that, on top of their usual responsibilities, chief information officers face a raft of new IT convergence and compliance-related challenges on a greatly reduced budget. Jim Ditmore, chief information officer of Global Retail Banking at Barclays, is nonetheless optimistic. He believes that his bank's business aims are so closely aligned with its technological capabilities that funding for IT will remain of great importance.
"IT funding is a significant priority at the moment," he says. "I wouldn't differentiate technological development from what the business as a whole is trying to do. New products and new capabilities are, as always, vital to the bank and they need IT to help them deliver."
Although Barclays managed to avoid the fate that befell many of its rivals, its position as an established player in the UK retail banking market means that it faces similar post-recession challenges. The introduction of Basel II and III has forced banks to meet stringent liquidity requirements. As a result, banks' internal risk assessment systems are having to be fortified, a process that requires collaboration between IT and other silos across the organisation.
"It is extremely important that we look to improve our risk capabilities and target the remediate areas related to this; those have received extremely high priority and consequent strong levels of investment," Ditmore explains. "Right now, we are very much viewed as partners with the rest of the business."
Although addressing these points is vital, the priority for Barclays, as for any business, will remain using innovation to expand its feature set and product range. To manage these developments, the organisation takes advantage of its considerable size and resource base by adopting a tailored approach to IT project management, with specially constructed toolsets being applied depending on the scale and nature of the undertaking.
"Small to medium-sized projects that involve, say, a system upgrade or the opening of a new branch or facility are handled within the team using a full project lifecycle and leveraging specifically designed templates," Ditmore explains. "A larger programme will be handled with a programme management construct. You'll have the steering committee and multiple stakeholders hoping to have the sponsorship to drive that programme."
These larger projects, in particular, require considerable oversight. The industry success rate for developments of this nature, around the £10 million-plus mark, is only approximately 50%, with the other 50% running over in terms of time or budget. Barclays is placing particular emphasis on its project execution at the top end of the scale, an area that Ditmore feels, while in line with the industry average, could be boosted.
"As a team, we've historically done well at delivering the medium-sized projects," he explains. "At the top end, I think we are as good as most in the industry, but we've recently managed to produce a very strong uptick in this area. Hopefully, we can continue to improve."
At the same time, this can't work to the detriment of small-scale, quick-hit operations. The level of overheads that must be applied to a large venture can impede execution if incorrectly used
on a smaller undertaking, which would likely be more process-specific and less strategic in nature.
"You often find that these lightweight systems are really focused on improving a particular internal process," Ditmore explains. "With the right workflow tools you can implement change much more quickly than by having to deal with
a much heavier toolset, which brings with it a range of encumbrances. We've developed a lightweight toolset, we've got a specialist team that knows how to execute with it, and we constantly update our methodology - this equals very good results."
This combination of agility and capability is vital to any IT department, but it is especially important when dealing with a large business that runs complex internal and customer-facing systems. Barclays uses a hybrid model consisting of what Ditmore refers to as the vertical and horizontal components. The vertical is broader in its vision, covering commoditised functions such as networks and data centres. It allows a company to be cost-efficient, flexible in terms of scalability and maintain firm control over operations. The horizontal is a more focused component that allows an IT department to be agile, solution-orientated and close to a business' daily operations.
"Oftentimes an organisation will swing like a pendulum between a completely decentralised view, which would be horizontal with each line of business, and a completely centralised view that aligns by utilities only," he explains. "Neither of these approaches works. A hybrid structure enables the bank to gain competitive advantage, on the product and features side as well as on the quality and cost side. It is effective and sustainable."
Today, the notion of sustainability takes on a double meaning. Rising energy prices and changing trends have forced banks to re-think their IT infrastructures, which require large amounts of power, not only to operate but also to keep cool. Barclays has played a prominent role in the advent of green banking. From an infrastructural perspective, it has looked to reduce the environmental impact of its information storage centres while carrying out day-to-day smart solutions that have resulted in considerable energy and cost savings.
"Technological trends that can really help us here, such as virtualisation of servers and storage centres, have proved a big opportunity for us," Ditmore explains. "In addition, we have been rolling out a power management programme for PCs. It turns them off when people go home and also turns them on at two in the morning so we can download the necessary patches. That saves 30% in terms of power."
These efforts have taken an increasingly customer-facing position. With sustainability coming to the forefront of public consciousness, environmentally friendly solutions that benefit the customer are not just a useful energy saver but a useful selling point. Barclays' dematerialisation of external workflow has not only reduced waste, but has sped up banking processes and reduced the capacity for human error.
"Our e-statement capability has only been around for a couple of months yet we already have well over one million customers using it," Ditmore says. "Instead of us having to print all the statements and then mail them, people can look at them online through already existing channels. We'll be looking to do more of that across Barclays."
All of this requires investment and there are fears among some businesses that a point may come when commercial interests outweigh environmental concerns. In Ditmore's view, however, the rate at which banking technology is progressing means that new opportunities to increase sustainability will arise - banks just need to be flexible enough to take them.
"It isn't all necessarily positive payback, but if you do it well when you're upgrading to more sustainable systems, you can minimise the negative impact," he explains. "Also, you have to remember that technology is not static. You can automate processes or use technology to offer new features and capabilities that make things easier for your consumer, to enable them to do more with less. It's not about focusing on particular tasks, but offering more to your customers."
Looking ahead, Ditmore doesn't see his team's priorities changing dramatically. Using virtualisation to create more sustainable data storage systems and increasing the sophistication and efficiency of risk assessment infrastructures will remain vital. However, Ditmore sees his own role taking on an increasingly customer-focused angle. With the sheer number of banks and financial institutions all vying for business, and new competition and custom coming from emerging markets, Barclays Global Retail Banking will look to remain one step ahead of its clients.
"You always have to learn more about your customers," he says. "Mobiles, smartphones and other similar devices have come to prominence in all industries. They are changing how people live and work and we need to recognise this."
Although Barclays will rise to meet these new technological needs, Ditmore urges caution. He is keen to stress the importance of keeping the customer fully informed, not just of what the bank can do for them but what they should realistically expect their bank to be capable of.
"New technology has raised our business customers' expectations as to what IT can and should be," he explains. "This is good, but at the same time, it is our job to keep the customer abreast of what is genuinely possible."
