If the best defense truly is a good offense, the banking industry will need to shift gears — and fast. According to a recent report by KPMG, U.S. banks gravitated to a defensive posture in the aftermath of the financial meltdown, and they are still in the process of updating their emphasis on selling businesses, reducing headcount and outsourcing in order to reduce costs.
IT professionals inside banks will help lead the offensive charge. “All this will put a heightened burden on IT in the years ahead, when it must play a central role in allowing banks to pivot from defense to offense, ” the KPMG report says. Technology is “unquestionably a top-of-the-house strategic imperative.”
None of this is news to the people in the IT department at Union Bank, N.A., the main operating unit of the $105.9 billion-asset UnionBanCal Corporation based in San Francisco. Professionals there are executing a multiyear IT modernization strategy that is less about bits and bytes and more about fostering collaboration within the bank and with customers, as well as implementing continuous improvement processes and gathering greater insights into the latest products and services that customers desire. “In banking, it’s all about innovation — there’s a push to become more consumer oriented, as seen in all the new mobile applications that are coming to market,” says Jane Clabby, Research Analyst with Clabby Analytics, a technology consulting firm. “Customers are not going to wait a year for new features when it’s so easy to go somewhere else, because the competition is so fierce.”
Satisfying digitally savvy customers, outpacing competitors and modernizing an IT infrastructure are all significant challenges on their own, but the stakes are even higher at Union Bank. Its parent company, the Bank of Tokyo-Mitsubishi UFJ, recently announced plans to merge Union Bank with BTMU’s operations in the United States.
Union Bank’s assets currently rank it in the mid-20s on the list of largest U.S. institutions, so becoming a top 10 contender will require the IT team to shine. “To do this, there are critical technologies and processes required from the technology team,” says Dana Edwards, Executive VP and Chief Technology Officer at Union Bank. “Becoming a bigger, stronger bank means we need to do things better, faster and more efficiently. Technology plays a huge role in this, and we are focused on delivering solutions that enable efficient scaling of our lines of business, enhance the ease of doing business with us and protect our customer information.”
A Reputation for Quality
It goes without saying that numbers mean a lot in the commercial banking industry — and total assets aren’t the only thing that matters. So when it comes to growing and innovating in a competitive environment, Union Bank has an asset other banks can only covet — an industry-leading rating as an institution on the forefront of positive customer experiences. This status was reinforced when American Banker magazine recently named Union Bank top overall among national U.S. banks when it comes to its standing with customers. When the publication and the Reputation Institute, a management consultancy, studied the reputations of 30 major bank brands, Union Bank’s score bested the second place finisher by almost nine points. Key categories that determined consumer impressions ranged from products and services, governance and performance to leadership, the workplace environment, citizenship and innovation. Union Bank ranked highest among banks in perceptions about governance and the workplace and came in either second or third in the performance, citizenship, leadership and innovation categories.
Edwards says the success stems directly from a culture that promotes positive customer experiences. “Every employee is a reputation ambassador, and we all understand that banking is about trust,” he explains. “There’s a good reason Union Bank hasn’t been a target of public criticism — we don’t deserve to be. We managed to avoid a lot of the issues that damaged public trust in other banks, such as our decision to never offer subprime mortgages to our customers.”
The modernization project that is building on these strengths is comprehensive enough to touch almost every aspect of Union Bank’s operations. Bank officials established project milestones that span three years, with deliverables in the form of new internal processes and consumer applications occurring approximately every six months. The overarching goals are to build an infrastructure that supports flexible and cost-effective growth, a social-network intranet and strong data management. “Most of all, we need to be sure that, as we unravel the technologies that make up the end-to-end systems, we do so in such a way that we maintain the integrity of the customer experience,” says Edwards.
Union Bank executives designed the modernization strategy with the customer experience in mind by making the fast delivery of new products and services a priority. These include additional mobile apps for consumers who want to transfer funds, make cashless transactions or apply for a product without having to visit a branch or fire up a PC. “An increasingly younger and more mobile workforce — accustomed to utilizing a variety of social and mobile applications — is driving a growing expectation that business technology should function like personal technology,” Edwards says. “Partnering with the business, we are designing with a mobile-first/social-first mindset where applicable.”
Bank officials also understand that mobile banking can occur anywhere in the world, so Union Bank will secure mobile banking capabilities for the large percentage of customers who frequently travel overseas. “With our customers, success is giving them the features that they are used to experiencing on other world-class e-commerce sites, and then taking them to a next level when on our site,” Edwards says.
The to-do list doesn’t stop with mobile applications. Also on tap are innovations in six other important areas:
Social and omni-channel strategies — Customers expect everything to be readily available at their fingertips. Union Bank is redesigning its customer experience to be omni-channel. The company has aggressive presences in social media, as well as considerable investments in redesigned banking and bill payment systems. Union Bank is also investing in branch strategies for an integrated experience.
Service excellence through IT governance — Sustainable results in technology require strong governance processes. Union Bank is developing global governance processes and using COBIT 5 as a basis for that. The results are coming quickly with improved service delivery and stronger alignment around the globe.
Master data management and data science — Union Bank believes that information is power, so it is no surprise that creating and maintaining complete and accurate master data is an imperative for the Union Bank team. Putting data science and Big Data to work will be an evolving discipline for the real-time analytics needs of the company.
Risk and compliance — Relevant systems will be better integrated and more closely documented and will see increased support by a larger base of internal and vendor-supplied subject matter experts. “The more integrated the systems, the higher the probability of controls being automated and thus leading to fewer errors due to manual handling,” Edwards explains. “This should help reduce the bank’s risk profile.”
Updates to the underlying IT architecture — Changes include focusing on enhancing enterprise agility by adopting a component-based, loosely coupled architecture — all with the goal of promoting agility, modularity, configurability, scalability and efficiency.
Next-generation data centers, DevOps and converged infrastructure — Building a strong company will require flexibility and integration in the company’s processes, as well as next-generation data centers. “Like most large institutions, we are not in a rip-and-replace scenario. However, we are in a build mode, and converged infrastructure, coupled with DevOps principles, is having great impact for us as we expand our company’s footprint,” Edwards says.
Executive VP and Chief Technology Officer at Union Bank
Opting In on DevOps
An ambitious schedule for rolling out products and services isn’t enough to ensure success in today’s banking industry. “It’s one thing to make the release date, but if we also release a superior product, under budget, with minimum defects and stress tested for maximum loads using the benefits of simulation — that’s even better,” Edwards says.
To do all that, Union Bank’s tech experts adopted DevOps, a growing movement within IT departments across vertical industries that’s designed to enhance collaboration between development and IT operations. The goal: faster and more predictable releases of technology and applications. “With DevOps, rather than going through long development and testing cycles and then releasing the product, it’s iterative — you do the testing as you go along,” Clabby says. In addition, consumers are more likely to have higher satisfaction rates with new programs compared to applications created with traditional development practices. “With DevOps, you don’t go live before you realize there’s a problem. You address them as you go along,” says Clabby.
DevOps does this by addressing the venerable challenge of making sure development and test systems mimic the production environment, and that test data accurately reflects real-world conditions. Both items consume time and money, and to mitigate the drain on resources, Union Bank’s IT pros are using CA LISA® Service Virtualization. The technologies help enterprises simulate both the data and production environments and help IT staffs create a reusable library of simulations for future projects.
The Union Bank staff is already seeing a payoff, as evidenced by its new mortgage application. “The implementation of our new system was one of the quickest in the mortgage industry,” Edwards says. “The new mortgage system gives us better capabilities and helps improve efficiency. We have better workflow capabilities and more control over configurations and business rules. It also gives us the ability to implement new products quicker. We have also been able to implement a paperless workflow. Overall, our capabilities to increase revenue and reduce cost have been greatly enhanced.”
Disruption is becoming a way of life for Union Bank as it addresses the upheaval happening in the industry. For some, living in interesting times like these may seem like a curse, but Edwards sees it differently. “This is an exciting time to be part of technology at Union Bank,” he says. “We are building a very strong foundation for now and for our future.”
Thanks to the right blend of industry-leading customer service, a modern IT environment, new business applications and the agility benefits of DevOps, Union Bank has an offense in place to help it become one of the largest and strongest banks in the country.
Security Is Everything
The must-have that overshadows all of Union Bank’s modernization efforts is security. “The bank’s employee and customer data protection comes first,” Edwards acknowledges. “The security perimeter goes beyond a user’s home computer. Risk controls are embedded on their phones, tablets and work computers.”
To enhance internal security protections, the IT department is adopting CA identity and access management solutions. This move replaces disparate legacy solutions with a single-vendor, industry-leading security solution that will better support Union Bank’s regulatory obligations and business needs while aligning security controls with the bank’s risk-tolerance levels.
This initiative will reduce operating costs by automating key identity procedures and reducing manual processing. Ripple effects will be the alleviation of end-user frustration with antiquated tools and slow response times for access requests and approvals. Similarly, the resulting automation will speed the onboarding and off-boarding of users, all while shrinking service desk call volume thanks to simple self-service password management.
“With our employees, it’s about self-service and reducing the number of clicks to lifecycle an employee into our systems,” says Dana Edwards, Executive VP and Chief Technology Officer at Union Bank. “The more they can do for themselves, the fewer help desk calls they make.”
Alan Joch is a veteran business and technology writer who specializes in enterprise applications, data center strategies, cloud solutions, mobile technologies and business analytics systems.