The most basic form of competitive analysis is to examine what other companies in your field are doing to meet the needs of customers. While that effort certainly remains relevant, when it comes to online and mobile experiences it's important to remember that your customers are likely comparing your offerings to those of digital-first organizations operating in completely different industries.
This is top of mind for technology professionals at Bank of America Merrill Lynch (BofAML), which has tripled its digital budget in 2016. "Our customers don't benchmark us against banks," said Hari Gopalkrishnan, CIO of client-facing platform technology, in an interview with InformationWeek. "They benchmark us against Uber and Amazon."
We spoke with Gopalkrishnan and other BofAML technology executives during the company's 8th Annual Technology Innovation Summit in Menlo Park, Calif., October 19 and 20.
The challenge for financial services organizations -- and, really, for any large enterprise with roots in what we'll call "traditional" business models -- is striking the right balance between low-touch, automated, digital customer experiences and high-touch, human-centered relationships that can, potentially, last a lifetime.
In the media world, we call this "omnichannel," and it's been a reality for at least 15 years. For financial services organizations, the concept is relatively new and boils down to reaching clients -- whether they're consumers or b2b customers -- across a variety of touchpoints, including mobile devices, computers, and physical locations such as bank branches.
[Bank Of America's Cathy Bessant was named InformationWeek's 2014 IT Chief of the Year. Read her story here.]
This is all delivered against a backdrop of hefty global regulations, constant cyber-security threats, and disruption from FinTech startups.
And what, you may ask, does any of it have to do with IT?
After all, we've been hearing the buzzwords "digital transformation" for quite some time now, and it's easy to dismiss the phrase as something dreamed up by industry analysts or ensconced safely within the domains of marketing and customer service.
BofAML serves approximately 47 million consumers and small businesses in the US and more than 35 other countries. It operates approximately 4,600 retail financial centers and approximately 16,000 ATMs.
It has some 34 million active online banking accounts, and more than 21 million mobile active users. The company offers wealth management, corporate and investment banking, and trading -- serving corporations, governments, institutions and individuals.
IT's Critical Role
For BofAML, IT involvement is critical to ensuring the digital experiences happening for customers at the front-end extend throughout the organization, according to Aditya Bhasin, CIO for the consumer and wealth management business, who spoke with InformationWeek during the summit.
BofAML's CTO David Reilly succinctly summed up the effect of digital transformation on IT in an interview at the summit: "It's underappreciated how much of your infrastructure has to change" in order for your company to be able to deliver competitive online and mobile services to customers.
At BofAML, this has meant moving to a private cloud approach Reilly called a "software-defined infrastructure."
"We did not see public or hybrid cloud providers that could do what we needed," said Reilly. "We're running 33,000 workloads on our cloud, and expect to add 2,000 per month through 2019."
The price point for standing up its own cloud was lower than all the public/private providers Reilly and his team evaluated. The company is spending $1.1 billion less today than it was in 2012 for network, storage, and server capacity.
"That economic benefit has helped our bottom line and enabled investments in new opportunities," Reilly said.
Some of those opportunities have involved working with tech startups, and moving away from monolithic legacy systems and the vendor lock-in that goes with them. "Moving away from monolithic tools means you have to work harder to make sure everything works together," said Reilly.
But it's worth it. Openness and interoperability are essential requirements for any tech vendor looking to do business with BofAML.
"Open, for us, isn't defined as 'your stuff works great with the rest of your stuff,'" said Reilly. "It means it has to work great with the rest of our stuff."
This puts a lot of pressure on any tech company working with the firm. "Anyone who has done business with us has the scars to prove it," Reilly said during a presentation at the summit.
Nonetheless, for each of the past seven years, BofAML has purchased products and services from about 17% of the estimated 280 new and emerging companies attending its summits each year -- "and every one of them has lasted with us," Reilly said in our interview. "It's worth going through the difficulty of contract negotiations with us."
In his presentation at the Summit, Reilly spoke about the company's expanding relationship with Splunk. "Initially, Splunk was being looked at as a log management solution for us," said Reilly. "[Former Splunk CEO Godfrey Sullivan] pushed us to think about Splunk in different ways. We use it to look now for indications of wire fraud. We push the edges of products you have, and think about deploying them in nontraditional ways."
Also at the summit, BofAML presented cyber-security firm Tanium with an award for innovation in enterprise technology.
The company also recently entered a strategic partnership with digital payments firm ModoPayments, and, in August, partnered with Matiland, Fla.-based startup Viewpost on new services for small businesses.
How the Culture Changed
The kinds of changes initiated five years ago at BofAML did not come without internal cultural shifts that permanently altered the way IT and the business side of the house collaborate.
For starters, Reilly brings his four direct reports to the tech innovation summit every year, and each of them is encouraged to bring along members of his or her own team. "It gives them a jolt," said Reilly.
"Nobody has time to look out the window and think. Forcing a moment where you leave your office means you see things you normally wouldn't see. We believe in bringing people out of their element."
Perhaps an even bigger shift for many IT professionals is the effort to break the habit of wanting to customize everything they lay eyes on. In fact, in his presentation, Reilly called on new and emerging technology vendors to intervene. "We have never met a technology we didn't think we could make better, or a technology we didn't think we could customize. We need your help not to do that."
In our interview, he elaborated on that plea. "In the moment of enabling the business, when a solution is 70% there, most technologists will want to include that extra 30%. They want 100%. They want perfection.
"There is a problem with technologists. The binary nature of technologists is literal. We're driven to deliver everything you might need. But how many menu options aren't used? Typically, more than half. There's no downside to pushing for 100%.
"But if I can implement a standard solution [without customizing], what am I really giving up? If it's not helping our company grow or reducing risk, it's not worth customizing."
[Want more on FinTech trends? Download the InformationWeek Tech Digest Top IT Trends to Watch in Financial Services.]
This mindset has influenced the kind of IT talent the organization seeks. "You must have technical expertise, first and foremost," said Reilly. "No GMs. You have to punch your weight on the ones and zeroes. You have to not be frightened by scale. You have to be willing to be in harm's way."
Gopalkrishnan added, "Operating for scale and operating for security are table stakes for us. We want design-oriented, inquisitive thinking. We want developers who can write code in the context of solving experience problems [for our customers]. Traditionally, with IT, that's not what you get rated on."
Added Bhasin, "We want our developers and our developer managers to be intellectually curious."
Most important of all is to get all stakeholders involved from the outset, putting executives around the same table from, among others, IT, line of business, analytics, and governance, risk, and compliance (GRC).
The company has moved from waterfall to agile development practices, according to Bhasin. Gopalkrishnan noted that artificial intelligence is also playing a big role in the company's tech plans.
So far, such efforts have resulted in a range of digital products and services for consumers, small businesses, and investors. For example, at this week's 2016 Money20/20 Conference, the company unveiled Erica, a personal voice and chat-driven intelligent virtual assistant that will be integrated into its mobile banking app.
The company also plans to roll out the Merrill Edge guided investing platform, which uses both "Robo-Advisor" tools and human advisors to help clients direct their investing choices in ways suiting their personal needs.
Some may want to completely self-direct their investing online, while others may want human advisors to help in defining their goals or guiding them about where to invest.
Other digital efforts seem deceptively simple. For example, six months ago, a consumer applying for a credit card at a local bank branch would have had to sign a variety of disclosure statements printed out on paper as part of the process. Now, the consumer receives a text message linking to disclosure statements and can text back his or her acceptance in one easy step.
The Technology Roadmap
Additional areas of focus for the company involve improving the digital wallet experience for its customers, enabling easy peer-to-peer cash and check payments via mobile devices, and facilitating cross-border payments by using blockchain for the engine and local payment processors for the final steps.
In his presentation at the company's Tech Innovation summit, Reilly outlined BofAML's 2020 tech roadmap, which includes:
- Evolving its private and public cloud strategy to provide digital infrastructure to support bank needs now and in the future
- Modernizing its data platforms to enable accurate and fast decisions that increase revenue, reduce risk, and deepen customer relationships
- Moving to component-oriented development in software delivery management
- Transitioning from many custom app development approaches and architectures to standards that can be managed consistently and effectively
Among the goals for BofAML's IT organization, Reilly said in our interview, are to automate as many functions as possible, to run 80% of its workloads on a standard infrastructure, and to avoid bespoke design at all costs.
The company's Christian Meissner, head of global corporate and investment banking, hit the nail on the head in his opening presentation at the summit: "Technology has gone from being an important part of our business, to being absolutely core to what we are about."