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The secret weapon for DX in banks isn't shiny new software. It's culture.

Red Hat's Monica Sasso says it's time to stop throwing things "over a wall..."

SPONSORED - Banks need to start rethinking their operational culture and improve internal collaboration if they truly want to evolve digitally amid pressure from customers, regulators, and rivals – breaking away from an “incessant desire to throw things over a wall” to someone in a different function. That’s according to Monica Sasso, a former Director in Deutsche Bank, who is now Chief Technologist (EMEA), Financial Services for Red Hat.

Culture may seem an unusual emphasis for a chief technologist – vendors can often be guilty of touting shiny new software or hardware as a panacea for all organisational ills – but drawing on years of experience in the industry, including at private bank Coutts, Sasso says that as an industry “if we’re beating the drum about collaboration, and how we ‘need to innovate, we need to empower our people’ then that requires openness and an ability to get cross-functional people in a room to swarm around a problem, go away and deliver it.”

Speaking with The Stack, Sasso is sympathetic to the challenges banks face and pragmatic about the pace of change: “Heritage and safety and trust all come at a cost and sometimes that cost is speed,” she notes, “but I do think big cultural shifts need to happen to accommodate digital transformation and modernisation.

“Whether those cultural shifts are breaking down silos, rethinking your three lines of defence model, or just communicating better between the control functions in IT and the business – as well as up, down, and all around the organisation – it can start with more openness about ‘where we're going and what our strategy is’.”

Sasso, who at Deutsche Bank led a sweeping regulatory change programme ahead of MiFID II, emphasises that technology changes often touch every part of a client’s journey. As a result, they need considering holistically, and often represent an opportunity to make more forward-thinking changes than initially thought.

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She says: “When you look at things like MiFID II it touches every part of the organisation.

“I remember sitting there in 2015, and realising that to get our response to MiFID II right, we needed to map out the entire client journey. That meant going back to basics, making it all about the client and how the client interacts with us. So much technology was touching each point of this client journey.  But you would have the front office person who would own this part; your ops people or your middle-office people would touch this part; and then you would have another person that would touch that part. It wasn't really cohesive.

“You would get an approach of ‘OK, here my requirements, I'm going to give it to IT and do other things while they frame their design or solution’.

“In IT, meanwhile, there was always a mystique to implementation: whether it was because IT wanted there to be a mystique, or whether it was because we were treating them as a cost centre, not as a partner.

“But as an industry we need to be able to talk about technology and how it complicates the client journey or how it enhances the client journey; to be able to explain it to Chief Risk Officers, Chief Compliance Officers, Chief Legal Officers, or some other super senior person who did not grow up with technology and might need more guidance understanding it," Sasso says.

She adds, bluntly: “I think that’s why IT professionals are probably at a watershed point. We need to drop the facades and have better, more open conversations that are frankly more truthful.”

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This can be encouraged by equally open leadership, she suggests, that facilitates more agile and collaborative ways of working. Red Hat’s Monica Sasso points to Spain’s BBVA – where Red Hat supported a move from legacy “vertical growth models” to a global cloud platform – as one example of this shift.

“The CEO of BBVA started being very open and honest with his staff and what they perceived as their competition and where they wanted to go. It was unheard of at the time to have such open and frank conversations, not only with the staff, but also with the public. And that's what needs to happen. Obviously there is a time and place for top-down leadership – and reform has been really difficult with leaders working from their spare bedroom – but to achieve greater innovation, you do have to be more open.”

Sasso also preaches pragmatism meanwhile around what is frequently derided as “legacy” technology.

She tells The Stack: “I think there's a perception that banks are moving very slowly but it’s not easy for them. The expectations on banks from both the regulators and us, as consumers make it very difficult to move quickly. People talk very glibly about ‘move fast and break things’ but I guarantee you that you don’t want the platform underpinning your mortgage or your current account to break,” she says, adding: “digital evolution is not about mainframe versus a server: it's about your strategy; your risk appetite; about what you want to manage as a firm moving forward. An investment banker might need zero latency, or a building society might be super conservative and be happy with their existing infrastructure, or a firm might want to run data-intense workloads. Those are all great reasons why they would use a mainframe over a server.”

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Looking at untapped potential in the industry meanwhile, she believes many in banking still don’t appreciate “the power of data”. Provided data is anonymised, nothing is impossible, says Sasso – but it takes work, partnering the right business functions together, and “understanding what the art of the possible is” in an approach driven by open conversation. With the right culture, the right mindset, and the right approach to data and transformation, banks can reap substantial rewards: “Hyper personalisation, that's a huge opportunity for retail banks, for investment managers, for everybody, and where AI and data can really work some magic.” -

Getting to this point means stopping the “incessant desire to throw things over a wall and wait for somebody to respond”, she warns briskly.

“Whether that’s someone in the front office wanting a different GUI on Salesforce; a new regulation coming in or the need to go after a new segment, the approach is still rife of ‘I have an idea! Throw it over the wall for a project manager or a business analyst to come up with the design; throw it over the wall for IT to go away and change the architecture and develop it and then throw it back over the wall to a control function to approve it.’

“Then you have to go back over all those walls again when there's a problem, forward again where you want to start testing. Things need to continue to be more collaborative and more real-time. And I think consumers and regulators and staff are demanding this. They don't want to throw stuff over walls anymore. They want to all get in a room, swarm around a problem and then go away and deliver it," she adds.

“The future of digital transformation in banking is less about IT as a cost centre in the basement; more about how we work better together; how we evolve the three lines of defence and how we deliver for customers and shareholders in a compliant manner.”

See also: Bank of England launches hunt for a permanent CIO