How Bank of America Is Transforming Its IT Infrastructure
Bank of America is undergoing a huge digital transformation in order to compete with up-and-coming FinTech companies that are eating into traditional banks’ market share. This transformation could inspire others in the finance world to make changes of their own.
Digital technologies have allowed small and savvy upstarts to disrupt giant competitors in almost every industry, and banking is no exception. Sensing a challenge from Silicon Valley startups, Bank of America Merrill Lynch has been leading the charge to modernize its banking capabilities for customers. The institution tripled its digital budget in 2016, and has sought out partnerships with new tech companies in order to integrate innovative services and applications that meet the expectations of today’s customers.
Hari Gopalkrishnan, CIO of client-facing platform technology at Bank of America, noted that "Our customers don't benchmark us against banks. They benchmark us against Uber and Amazon." In response, Bank of America is developing its online and mobile platforms for a cutting-edge, mobile-focused customer experience that prioritizes security and ease-of-use.
But even as clients come to expect seamless digital experiences, banks need to balance automated transactions with the human-centered, interpersonal side of banking, and make sure both sides are working in sync. Managing someone’s money demands a good deal of trust between bankers and customers, so banks can’t afford to simply lead customers through a series of automated hurdles to get what they want.
If they want to strike this delicate balance, companies like Bank of America will to engage clients across a variety of touchpoints: mobile devices, computers, and brick-and-mortar locations.
According to Aditya Bhasin, a CIO at Bank of America, IT involvement is crucial to extending streamlined, digital, front-end experiences throughout the organization. Considering that the bank boasts approximately 4,600 retail financial centers, 16,000 ATMs, and 34 million active online accounts, this is no small thing for Bank of America.
At the heart of the institution’s push into digital innovation is their drive towards a “software-defined infrastructure.” Believing that such an infrastructure is the future of finance, the bank created a private cloud system to accommodate massive network, storage, and server capacities, all of which necessary to support their many accounts.
But even with this customized digital infrastructure, Bank of America also realized that the work and expense involved in creating something so large from scratch was impractical. Instead, they worked with multiple tech startups in order to move “away from monolithic legacy systems and the vendor lock-in that goes with them.” Each of these tech companies specializes in a different discipline that contributes to Bank of America’s arsenal — Splunk handles log management and wire fraud, Tanium was called in for help with cybersecurity, and ModoPayments helped to establish new digital payment systems.
By collaborating with these different companies, Bank of America has set the industry standard for openness and interoperability. "Open, for us, isn't defined as 'your stuff works great with the rest of your stuff,’" said CTO David Reilly. "It means it has to work great with the rest of our stuff."
None of this would be possible without significant cultural shifts as IT and business departments adjust to this new collaborative spirit. In particular, Bank of America IT has learned not to go too far in customizing their tech following the shift from waterfall to agile development practices.
According to Reilly, “[Technologists are] 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 [...] it's not helping our company grow or reducing risk, it's not worth customizing." The most important priority, Reilly says, is “to get all stakeholders involved from the outset, putting executives around the same table as…IT [and] analytics.”
In light of this, other banks need to start thinking about potential improvements to IT infrastructure in order to compete with Bank of America and the digital-first platforms that inspired them. Financial services firms should examine the needs and preferences of their customers and make adjustments accordingly -- the best way to adjust, as shown by Bank of America, is to partner with tech vendors who specialize in the solutions they need.
TeamQuest’s tools have a proven ability to stabilize and increase the efficiency of electronic banking systems, track performance, model capacity requirements, and ease collaboration between IT and other departments. For example, one Czech bank made use of TeamQuest’s capacity planning tools to allow bankers to fully understand the technical aspects of their banking interface and receive advance warning of service delivery issues. Another Fortune 100 company was able to reduce capacity-related outages by a whopping 20% with the help of TeamQuest capacity management software.
Transforming IT infrastructure the takes effort, innovation, and collaboration, especially in the finance industry — but the returns you see from meeting new standards of customer expectations are well worth the initial investment.
(Photo Credit: Mike Mozart/Flickr)