Banking IT's success on customer behaviour

CIOs have used many analogies to describe their changing role within the organisation, but Maslow’s ‘hierarchy of needs’ psychology theory is arguably a first. Yet this is how Westpac Group CIO, Clive Whincup, sees the evolution of IT leadership.

“When I think of Maslow, I think of the rise from survival instinct to self-actualisation,” he tells CIO. “The CIO today is really a vastly expansive role in terms of the areas it covers with its scale from operations to strategic thinking. It’s also a good metaphor for the breadth of organisational activity versus maturity of technology.”

According to Whincup, accelerated pace of change in the past three to five years has seen CIOs morph from a purely operational mindset to one of anticipating change. “If you’re too much on the day-to-day operational side, you’re not focusing on how the organisation leverages technology to provide customer service,” he says.

However, those CIOs that don’t keep an eye on the basics are also not doing their job properly. In Whincup’s case, one of his five priorities is keeping the bank running efficiently and securely.

“CIOs are getting more and more involved at the top, and being asked to look forward and be more active in strategic thinking and planning, but when there is a set one incident you’ve got to quickly come back down to operational mode to get things running,” he adds.

“A lot of north American banks are separating the two sides of the role and appointing a more operationally-focused CIO, and then a more future-focused CTO. It’s an interesting proposition as it certainly reflects the fact that dealing with more strategic issues is fast becoming a full-time job, rather than an occasional strategic review.”

Technology core

Whincup has certainly been tested on both technology and strategy throughout his career, which spans the UK, Italy and now Australia and includes roles either in banks, or for consultancy groups dealing with the financial services sector such as Accenture.

The first 10 years saw him in highly technical positions, before he made the decision to shift into managerial business and strategic planning roles.

On the European mainland for instance, Whincup helped develop the pre-cursor of Internet banking and electronic data exchange and payment systems, along with standards for messaging systems with the Italian Banking Association.

The work led to him representing Italy on the United Nations Edifact Council, a role he admits “confused people a lot”.

Whincup returned to the UK with the Bank of Scotland, managing technology and working with the board around strategic planning activities, before returning to Italy as CIO for the Bank of Popolare Di Milano. He describes his five years there as transformative.

“We bought three banks, changed to the Euro, and completely re-engineered their management platform on a Linux operating system,” he recalls. “I then went back to London and worked for four years with Lloyds Bank. The latter part of that was around infrastructure; Lloyds has some issues with internal infrastructure and I was asked to take over management of group infrastructure for technology.”

A phone call from former Westpac CIO, Bob Mackinnon, in 2009 saw Whincup relocate to Australia initially as service delivery manager for applications, then group general manager of service delivery and technology. He was appointed CIO of the group in December 2011 following Mackinnon’s promotion to the Group Services division.

Customer facing

Since 2008, Westpac has been on a $2 billion technology transformation aimed at ensuring the banking giant aligns with the changing needs of its customers. The first phase of this 10-year work involved 15 Strategic Investment Priorities (SIPs) encompassing technology, infrastructure and operational upgrades.

According to Whincup, most of these have been completed, with the remainder to be finished in the next 12-18 months.

The focus has now shifted onto phase two, which is heavily geared towards leveraging Westpac’s core wealth division capabilities through a core replacement program, and its expansion into more Asian markets. Both areas also rely on improving customer-facing online and mobile capabilities.

Whincup used his keynote at a September 3 Trans Tasman Business Circle event in Sydney to signal this next phase of transformation, which also includes formerly deferred plans to migrate disparate brand platforms internally onto unified architecture.

While the big multi-year roadmap provides the vision, Whincup agrees the work requires a more flexible, short-term approach given the rapid pace of technology change and customer expectations.

As a result, Westpac has opted to run the large wealth core replacement program purely on an agile methodology.

“We have used agile methods around the organisation for some time, but this is the first time we’ve used an agile approach on such a large program and it’s a voyage of discovery for us,” Whincup says.

“It’s working very effectively; it has challenges but we see huge benefit in the way we work on the program.”

One such plus is very tight integration of the various skills required to deliver the program, from technology to project management, to business skills and knowledge, he says.

“It’s a very good way of getting maximum delivery throughput for the core business outcomes we’re driving towards,” Whincup adds. “Agile is a methodology we will be using more extensively on larger programs going forward.”

Another way Westpac ensures ICT teams are fully integrated with the lines of business is to maintain several division CIOs, who report into Whincup but effectively own the end-to-end applications capabilities of their business unit. This is supported by a shared infrastructure manager across the group.

“This ensures the CIOs stay close to the business and are part of the business team, living and breathing the business challenges,” he says.

For Whincup, technology is not the strategy, it’s as a way of driving forward the strategic aims of the organisation. “It’s the notion of partnership and being part of the business, which is at the essential of how I interpret the role of CIO,” he says.

This is crucial in an age of complex, multi-channel and digital interaction, which requires banks to conduct tailored, one-to-one relationships with their customers whenever and however they choose to engage, even as device and connection choices proliferate, Whincup says.

“It is foolish and perhaps a little arrogant to believe technology alone can be a strategy to truly solve customers’ needs,” he says. “The customers we serve – their ambitions, their plans, their way of life – must come first.”

For Westpac, it comes down to reorienting products and services to focus on an individual’s financial outcomes at various stages of their lifecycle, Whincup says. Like many banks, Westpac is working to better utilise customer data sets for proactive interaction, and putting more emphasis on real-time information exchange.

“Traditionally, what we have done is store lots of data in warehouses and done lots of data mining and analytics and driven more campaigns from that,” Whincup says. “The trend today is looking at that data in the moment, and as you’re interacting with the customer, whether it’s on the phone, face-to-face or on mobile devices. That’s what driving our data focus right now.

“We have an internal program called ‘know me’, which is about knowing the customer in real-time through their interactions with the bank. We know a lot about what our customers’ preferences are, and it’s about responding to those and catering for individual needs without necessarily having to ask what those needs are. It’s about enriching that customer experience through real-time analysis of what the customer is doing.”

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The next paradigm

Given his love of technology and his focus on customer service, it’s not surprising Whincup is keenly interested in how emerging consumer technologies, such as wearable computing, will influence the next generation of customer interaction for the bank.

“The primary difference between wearable and portable is that wearable is never off. It’s almost the equivalent of stream of consciousness; it’s that continuous exposure and connectivity,” Whincup comments.

“That’s why I refer to the digital world as ‘only now’; this will increasingly be the case as people become almost permanently connected to the Internet, receiving and offering information on an ongoing basis.

“What will be fascinating to watch is how customers adopt their behaviour to that kind of exposure. We have certainly seen behavioural shifts very clearly in our data in terms of how they use mobile devices like smartphones and tablets. How they use mobile and wearable technology is yet another paradigm shift.”

As an example of the unpredictability of technology trends, Whincup points out Paywave and contactless payment technology, has chalked up a dramatic adoption rate in the last 18 months.

“It’s not always easy to tell when that’s going to happen and when customers will start adopting technology that already exists. The best form of defence is to make sure you’re always on and always watching customers,” he says.

“We are very sensitive to usage of our mobile channels because it’s all about active users for us. It’s almost irrelevant the number of downloads of the app; that’s just one piece of information. The important thing is how frequently and how exactly those channels are being used because that gives us the insight into how customers are thinking and acting.

“If you’re just tracking the number of customers without paying attention to what they do, I’d challenge whether you have a customer-centric approach.”

Addressing the talent shortage

One of Whincup’s key concerns from an ICT industry perspective is the ongoing talent shortage. While committed to recruiting local staff, the lack of skills in Australia has seen Westpac offshore select project and specialist ICT jobs in recent years. The talent problem is everyone’s to own, he says.

“I can never get over the fact that while we increasingly spend time talking about technology and wondering about how marvellous it is and how rapidly it’s changing, we seem to be incapable of attracting people into the industry,” he says. “It’s such a huge paradox, it almost defies explanation.”

Whincup believes more ICT professionals need to be out talking to younger generations about the sector, particularly high school students. “We need to get in there a long time before these young people make careers choices to make sure they’re aware of technology and what a career in the industry is all about,” he claims.

One of the challenges he sees is the quality of the ICT education. “It’s an uphill struggle convincing kids that IT is an exciting career that allows you to travel internationally and so on, when it’s a boring course taught by unqualified or skilled teachers who aren’t that passionate about technology,” Whincup claims.

“I see it from my own kids’ perspective: While they are avid adopters of technology, their view of technology as a profession is that it’s boring.”

There is also a lack of comprehension around the diversity of skills ICT professional need today. Whincup points out Westpac’s competency framework, which is based on the Skills Framework for the Information Age (SFIA) model, identifies 90 different families of skills across the range of technology roles at the banking group.

“A lot of those skills are not about the technology; they’re about working in complex problem solving areas, working with large teams, there is a heavy people-orientation to the job as well,” he says.

“These are things not immediately evident outside the profession, but core components to effective working in technology.”

The other challenge is the ubiquitous nature of technology, Whincup says. “If you look at Apple, its entire philosophy over decades of development has been to hide the technology.

It’s not really surprising with the increased consumerisation and closed world of the Apple environment that people are less and less encouraged to be curious when you can’t even take the back off the iPhone,” he claims.