Bank of America CIO on Big Data, Emerging Enterprise Tech
Catherine Bessant hates the phrase "Big Data."
"As a term, it means different things to different people, and it creates a black box or a mystery around data," says Bessant, who is head of global technology and operations at Bank of America; the bank's CIOs report to her and she reports directly to CEO Brian Moynihan. "I think making data a black box works against its use. It overcomplicates the topic, when all you're really trying to do is add up the sum of the micro transactions to tell you something you couldn't see" before.
Data can be a distraction, she points out. "Data might tell you that you have a problem that happens only .3% of the time, and you might think you have a process or a platform that's in fully in control," she says. But there could be trends within that .3% that are important. "How do we make sense of everything that happens underneath the surface to turn it into something we can see?"
Rather than Big Data, she would prefer to just use the term "data."
Despite the overhyping and haziness of the phrase, Big Data is important to $2.2 trillion-asset Bank of America, which has been using data analysis to examine customers' branch visits, calls to the call center, chat sessions, and online banking sessions to get a full view of customer behavior.
In one outcome, the bank recently began a multi-market rollout in Boston of an ATM that can perform 80% of teller transactions, including cashing a check to the penny. To handle complicated transactions, the customer can speak to a bank employee live via video chat.
Data was analyzed to determine how people would want to use the new ATMs with Teller Assist and whether it would decrease or increase teller transaction time.
That the bank is deploying self-service kiosks is not too surprising given that Bank of America has closed 260 branches over the past year, or 5 percent of its total, leaving it with roughly 5,400 locations.
But Bessant says the new machines are not meant to decrease human interaction, but to be an additive channel. "The demise of the banking center has been predicted for a long time, and here we are," she says. "People go to branches for different things today than in the past, but the channel is still highly relevant."
Although she oversees about 100,000 employees (more than a third of Bank of America's total) and is just ending a whirlwind business trip, hitting several cities in 14 days, Bessant is warm, relaxed and funny. She helpfully spells out words out for clarity (e.g. hearty vs. hardy) like the former English major she is. She remembers that the last time we met, over a year ago, I showed her my wireless keyboard for my iPad; she went out and got the same one. She demonstrates how her new MyCharge device for juicing up Apple, BlackBerry and USB devices speaks French.
She is keen to share the technology terms she would like to see eliminated from the industry vocabulary. In addition to Big Data, she dislikes the term "the cloud."
"First of all, there's no such thing as the cloud," she says. "There's the virtualization of a lot of elements of a technology stack, such as virtual servers and virtual storage. The virtualization of things that used to be physical is an important set of breakthroughs that have happened for efficiency and effectiveness."
Both terms — Big Data and cloud — needlessly create mystery around technology, Bessant says. "And technology as a mystery is a bad idea." It's harder to align the technology to the business under such a veil and "people don't know how to fund or prioritize technology decisions because we've made them so mysterious." She muses that this is why the average tenure of CIOs in general tends to be short. "Anything that distances technology from the business is inherently self-limiting," she says.
B of A’s Streamlining Continues
The IT transformation project Bessant has been working on since she took this job in 2010 is proceeding on track, she says, for its 2014 completion date.
The technology division has been unifying platforms, and has reduced the number of applications used in the bank by 17 percent. Where there used to be 22 collateral management systems, for instance, now there is one. The bank used to use eight different teller systems and has brought those, too, down to one. Myriad call center and IVR programs have been taken down to a narrow few.
"It's an efficiency play — you're more agile in a marketplace if when you want to implement a change you only have to implement it once and test it on one platform," she says. "We've also continued to make progress modernizing what we do, taking two down to not just one, but two down to best," Besssant says.
Bessant's group is redesigning the bank's IT architecture, "so that in every element of architecture we're making the shortest possible distance between two points, not making four points if only two points are needed." Some networks have been re-routed, for instance. "We've been monomaniacally focused on simplification," Bessant says.
Through Project New BAC, Moynihan's plan to reduce costs with better use of technology, the GT&O group is working on 500 new ideas, many around automation and workflow.
One ongoing goal for Bessant is what she calls "the elasticity of assets" ("my own ridiculously mysterious term," she says). She's referring to the ability to have enough IT infrastructure to handle peak demands, but also to be able to take cost and capacity out when business changes demand.
Another goal is software consistency — customizing software only where that creates value.
"That sounds simple, but the art of technology lends itself to the designing of custom solutions," she says. The bank isn't necessarily going to off-the-shelf software, but trying to use some common software building blocks across the organization.
The Right People
The layoffs Bank of America has experienced lately have not harmed GT&O, Bessant asserts. Bank of America has cut 16,000 jobs over the past year, or nearly 6 percent of its workforce, reducing its headcount to 263,000.
"Net-net, there's no question our workforce has come down, but I would say it's come down in the right way, because we've gotten more streamlined," she says. "We're automating more and gaining productivity. As we deepen expertise in certain domains, we don't have to out-muscle a business problem with people, we out-man it with intellect. We've worked hard to build talent at the senior ranks of GT&O, and that gives us an outside benefit in terms of leverage. The things we do that make us better in GT&O also sometimes mean we have fewer people."
The technology division is an aggressive hirer, due to attrition and changes in skill sets it wants to acquire, she says.
"The way we've changed our workforce has been more strategic than just over time, fewer heads," Bessant says. "It's aggressive promotion from within to make sure we get subject matter experts moved up the hierarchy. We hire from outside when we need to fill a talent gap or accelerate an outcome."
One of the benefits of running a tech team as large as Bessant's is the diversity of talent it can draw. "In our most critical roles we want to be able to say we have the number one, two or three person in the world at that function," she says.
The bank is changing the mix of its use of third parties and bank employees. "Over time you'll see us rely less on third parties for staff augmentation," she says.
Emerging Technologies at B of A
Bank of America is not known for being first to market with emerging technologies; it tends to take a slow, careful approach.
But one tech the bank is testing is biometric authentication for mobile banking, online banking and internal use. Biometrics themselves have been around for decades, but they've been rarely used in banking to date. (The term "biometrics" does not bother Bessant, "because it describes exactly what it is — the measurement of something biological for a business purpose.")
Specifically, the bank is testing facial and voice recognition for online and mobile banking. In some of its newer buildings, such as its 1 Bank of America Center building in Charlotte, it is using retina recognition for building access, with a 90 percent adoption rate.
In the past, Bank of America has experimented with fingerprinting — "a biometric of the past in so many ways," Bessant says.
One that has criminal connotations.
"That's why we never did it," she says. "Our desire to protect our customers using that biometric wasn't perceived by them to be a positive."
In another emerging-technology example, the bank is considering combining geolocation with its Bank Amerideals merchant-funded rewards program to deliver offers to customers in real time while they are in a particular store, such as Baby Gap.
"What we're all wrestling with, and it's a great intellectual debate, is, what is the balance between things that can protect a customer and things that could be perceived as creepy?" For instance, a fraud alert sent to a customer whose card has just been used in Mobile, when his GPS says he's in Montgomery, could be considered useful by the customer. "There are ways to apply geolocation to protection, ways to apply it to sales, and ways to apply it that might make customers feel uncomfortable. Where customers are in that spectrum, those things are all emerging."
Opt in and opt out will take on whole new meaning in this ongoing debate, she says. "We're just at the nascent stage of that."
Bessant's team is also looking at new technologies around the construction of data centers — how they're configured (using pods), and the control of humidity and temperature — "things that make technology more hearty," she says.
Tablets have begun playing a big role in the branches and in the financial advisor teams in Merrill Lynch wealth management. The bank is developing its Cash Pro app for commercial customers for tablets. "The tablet changes our opportunity to do almost everything, from financial advice to transactions in the branches to corporate banking," Bessant says. "We're only beginning to unleash the power of it."
One area of banks that's ripe for better technology and automation, according to Bessant, is compliance.
"Compliance is all about finding the places where you might not be complying," she says. "By its definition, it's prone to data and analytics as a tool. It's all about finding the outlier, finding the exception. If you're processing wires and want to comply with AML or economic sanction regulation, you can check those wires manually or in an automated fashion using word recognition and other technology."
Software is faster and more accurate at finding the exceptions than people are. "Compliance is one of the sweet spots where tech and data analysis really pays dividends," she says.
Overall, Bessant says, "it's a great time to be a technologist. In case you can't tell, I'm still loving it."
This story originally appeared at Bank Technology News.