Changing Perception of Technology and Customers

Date:   Friday , April 29, 2011

We spend over $1 billion in technology. IT has really evolved in banking. 30 years ago banks started investing in technology really in the back office as an efficiency glide and then we took it into the middle office and then to the front office. In each case enabling strategies and also, in a lot of ways, allowing banks to be skilled players. What has happened in the last ten years, specifically now, is that IT has become the business. For a lot of innovations that we are doing in the IT and the banking services, information is the core. Whether it is in how we package the product or how we use information differentiation in terms of delivery or creating a customer experience, either in the three dimensions information becomes the key differentiator.

Another key differentiator is customer experience. Enabling IT, we have created the concept of Virtual Wallet. This is a product offering that we have created for GenY. What we normally do when we think about a new product is to think about, what all different packages we can provide, how can we package it, and so on. But in this case we started by thinking how the customers think about money and then how can we create an experience that they would associate in a compelling fashion that would make us a compelling choice. We had some very interesting learning, for example, they donít like to think about accounts. As a bank we were on the business of thinking about accounts, but they would think about money as a resource, money is to pay bills, to do some projects, and some money is to save. The point is how we approach the customers is changing. We understood how they think about money. We took this information about financials, about a customer, and thought about how we can make it more meaningful, more relevant, more individualized, so that it is more customized for a customer. That product has just done phenomenally wellq1. At GenY it has created a real buzz. The underlying thing is not that how technology played a role, but how really we mined the information to think about going to the market and then leveraging technology to be both the enabler and also to create a possibility.

There is always a belief that IT would enable a business possibility. But my view is IT also creates business possibilities. And this is a very good example where we wouldnít have thought about an experience that we could create until we said we could bring different technologies together to create an experience in a different fashion than we have created before.

Technology can influence business models
We often hear the statement that a CIO has to stay very business focused. It is true. But when I say business focus it is not limited to working towards business priority, but more on what is the business outcome of what you are looking to do. We can talk about many technologies, like virtualization, cloud, and a whole range of things that we are really excited about, but at the end of the day you have to see what business outcome are you really creating and is that business outcome compelling. When that business outcome is compelling for the company, more often technologies are the center. It is more about bringing out a business outcome that is compelling. For an example, if you look at the music industry you can see the transition from LPs to cassettes to CDs to iPods. If you think about how the technology has changed, quality of music has improved, but the real story in my view is that iPod was the trendsetter. What it fundamentally changed was how customers were empowered to really listen to the music the way they want. You donít have to buy the entire album, you can order single songs and play it the way you want to play. The customer really became the driver of this industry.

Perception on risk management
What is unique about risk in my view is that risk should not be viewed in silos. Risk needs to be a dimension of the same information, the same relationship, same portfolio, and to the same view, you have risk dimension, financial dimension, customer dimension, and all the dimensions you could have. Two important things in risk are -you should have a really good data that you could analyze in a dynamic and comprehensive fashion. Gone are the days where you ask someone to write you a report and by the time the report is done it is old data that is no longer relevant. The second aspect is that banks and financial services needs to focus more on is how we can create a risk management information that is a lot more forward looking- a lot of people are getting very good at rearview mirror of information of risk: what happened yesterday, how many loans are delivered, who did not pay, who paid, what type of portfolio, what products and so on. In our view we should get really good at modeling that information into what could we say about our future. Because, fact of the matter is that the people who manage risk well are not only the people who look at the future or past but who can say something about the future and that is a capability as well as an orientation that we are all looking to develop.

An ERP for technology
I believe that the technology that we have to manage our technology complex is inadequate. There are a lot of gaps. I have talked to the major technology companies; we need to be in the hunt to create the ERP for our technology. All the enterprise tools that we think about, we need to have an integrated set of tools complex that can measure, that can set up, could be proactive or dynamically tell us when something has gone wrong, proactively alert us, help manage the resources. Today, any major company uses hundred plus tools to run their technology complex. Someone could come in and say we bring an integrated set, and integration is really important.

From my knowledge I would say that the major 3-4 technology companies all have some visions around it and are doing some works towards it, but no one in my opinion has come out with the view of saying I have an EPR solution for you. I think if someone can develop it and market it, it think it will be a major winner because we have hundreds of people managing these technology complex and if we can get an integrated view where we can run things in much more streamlined fashion, where they predict the outcomesí ability to have alert proactively, we donít have to learn seven different tools and try to rationalize how their results are, I think an ERP for technology complex will be hugely compelling.

The leader in the CIO
The job of a leader in my view is to create and articulate an aspiration for the team. Because, if you can get people aligned to a compelling aspiration then they get energized and the ability of the people comes to a level where they will go and execute things which you think will be impossible. A leaderís job is to create that compelling aspiration, communicate it, and get people aligned to it. If you look at our CEO he does that remarkably well. I think that is one thing that has become really important.

Anuj Dhanda is executive vice president and chief information officer for The PNC Financial Services Group. In this role, Dhanda leads the technology organization for all the lines of businesses. In addition, he is responsible for PNCís technology infrastructure, voice and data networks, distributed computing and desktop technologies. Dhanda joined PNC in 1995 as senior vice president and manager of small business lending. Prior to joining PNC, Dhanda worked at JPMorgan Chase (formerly Chemical) for six years, where he was senior vice president with marketing and strategic planning accountabilities for the Consumer Banking group in New Jersey.

Dhanda received his Ph.D in management (finance), MBA from Rutgers University where he was the recipient of the prestigious Sonn Excellence fellowship and received his undergraduate degree at University of New Delhi. Dhanda serves as the chairman of the board of the directors of the Mattress Factory Museum and is a member of the Advisory Board of Carnegie Mellon University School of Computer Science, and the BITS Advisory Group of the Financial Services Roundtable.