One small step, one giant leap

Over the last 18 months we have become accustomed to hearing about how some of the world’s biggest banks are suffering at the hands of the economic crisis. But do current markets actually provide some leverage for smaller banking organizations? ATB Financial’s VP and CTO Mike Redeker thinks so, as he explained when we caught up with him in Miami.

“We're actually in the enviable position that we're small enough, in comparison to the big banks, where we believe we can take out our old application and put in the new application”
-Mike Redeker, ATB Financial

At ATB Financial we have a two-pronged approach to our overall strategy. One is that we are in the process of replacing our core banking application; we recently put a deal together with SAP and are now implementing that end-to-end across our entire enterprise. So that's one fairly significant step inside of ATB. In conjunction with that, what we want to do is replace our infrastructure so that over the next 18 months, as we refresh, we can effectively overlay the SAP application so that it runs very effectively in our overall production environment.

We’re actually in the enviable position that we're small enough, in comparison to the big banks, where we believe we can take out our old application and put in the SAP application, and yes, there will be risks associated with data conversion, but we actually have a pretty large team in place, focused on the areas where we think we're going to have the risk. It's not the technology that's going to be the challenge; it's actually how the people are going to associate with the data and use that technology that is going to be the challenge for us. Ultimately, this is not an IT project. This is straight from our CEO that this is a business transformation project – it’s just that the technology enables it to make the difference. This is driven out of the business, for the business, and IT will support the business units to make it successful.

The way we look at it is that we have an architectural team that is actively involved in the core banking transformation project and that team is helping us define what our strategy and our direction will be – architecturally – across the enterprise going forward. Given the order of magnitude around our efforts in SAP, it only makes sense to say that if you're going build that solid foundation, take that and leverage that going forward.

I firmly believe that the CIO function starts right with the core data itself. Data is at the heart of running our business and we can have technology challenges all we want, but if we have a challenge with our customer's data, we have a much bigger challenge inside the marketplace. Everything is encompassed by data privacy, compliance and how we leverage that data, what we do with it, the storage of that data and so forth. Right at the bottom level is around the CIO's function and the ownership of the data all the way to the end of what reports we produce and how that data is distributed and shared inside the lines of business. What’s more, research shows that nearly $30 billion was spent on compliance alone back in 2000, and that is clearly an unsustainable situation. The reason we’re seeing such a huge spend is because of minimal efforts in the past and so a number of my peers inside the banking industry are trying to catch up around compliance and move forward.

In addition, many analysts are now predicting increased outsourcing in financial services. I consider myself pretty lucky because I have a background that I have been in the outsourcing space for the last decade, first as a vendor with IBM Global Services and now as a customer. Also about 10 years ago, ATB Financial outsourced a huge portion of its operations, and we have slowly but surely brought services back in-house. Outsourcing provides a lot of benefits to our organization, but you have to look at the risk associated with that. You do lose intellectual capital, a certain amount of control and a certain amount of the abilities associated with ensuring you're maintaining industry compliance. So while I do see how outsourcing may continue to grow because of the downturn in the economy, with people looking at it as an avenue to save on their costs, I think that if the balance isn’t right, it just creates a significant number of other challenges going forward.

If you outsource a number of products and services, by default you lose that intellectual capital and you're not going to be any different than anybody else. However, if you maintain that intellectual capital it allows you to be flexible, innovative and provide products and services that your competition doesn't bring to the table. That's what makes us different.