Better together

Deutsche Bank’s Edward Jones reveals how he is aligning compliance with business and IT goals.

Deutsche Bank is one of the world’s leading international financial service providers with roughly US$998 billion in assets, approximately 65,400 employees and unparalleled financial services in 74 countries.

As a lean, dynamic, focused universal bank, Deutsche Bank ranks among the global leaders in corporate banking and securities, transaction banking, asset management and private wealth management, and has a significant retail banking franchise in Germany and other selected countries in Continental Europe.

FST. Deutsche Bank’s IT operations are huge and the challenges complex – yet the company is regularly championed for its innovative use of IT. What is the secret of the firm’s success with regards to information technology?
EJ. I believe it’s our ability to set a clear business strategy that encompasses well-defined customer requirements. Developing a close partnership between the business, IT and operations ensures that the roadmap is created with a holistic viewpoint. Providing remote connectivity to centrally managed platforms – alleviating the need to deploy IT solutions in multiple locations – is also key to the bank’s strategy. We have also taken advantage of low cost locations such as Moscow and India to build our IT expertise. Finally, our investment governance process ensures that we are spending our euros or dollars wisely as it relates to a positive ROI and the initiatives fit into the overall strategy of the bank.

FST. What technology developments are you currently rolling out at Deutsche Bank? What challenges do these initiatives address and what advantages will they offer?
EJ. There are a number of initiatives geared towards developing global and competitive solutions. Recent investments in our US equity platform enhanced our capabilities and commitment to clients through providing them with the broadest of product coverage and best execution for equities. In the past year, we have seen our volumes in this space grow over 300 percent in NYSE trading volume and over 200 percent in NASDAQ trading volume. In our cash and clearing area, we have implemented a global money transfer new architecture for euro, dollar, sterling and multi-currency and a new global messaging capability that focuses on SWIFT, telex and fax communications.

FST. What achievement at Deutsche Bank are you most proud of?
EJ. There are three things really. First, our ability to keep pace with extraordinary growth in both volume and breadth of product; second, the way we are developing state-of-the-art IT solutions that are best-in-class and innovative; and most importantly, the resiliency of our organization both from a people and technological perspective – especially with respect to the events of 9/11.

FST. While originally thought to involve finance departments only, the demands of regulations such as SOX have made their way to the desks of CIOs charged with the task of supporting compliance initiatives with technology. How can IT help support and drive compliance requirements?
EJ. IT can play a significant role in supporting the firm’s compliance with new regulatory requirements. IT can develop solutions that minimize the bank’s risk exposure. The solutions must be scalable, global and robust; capable of looking at our position cross-business; and also adapting to an ever changing regulatory environment.

FST. And as a CIO yourself, how are you meeting the challenge of aligning IT and compliance strategies?
EJ. Compliance and regulatory control are among our highest priorities. As CIO for the Americas, I am a member of several governance bodies (that include compliance) whose primary focus is ensuring we maintain a controlled and regulatory compliant organization. We view compliance as a core component of our overall business strategy. As such, we ensure our financial planning and investment governance processes pay close attention to this ever-changing landscape.

FST. The ‘Chief Compliance Officer’ is now an essential board member at many firms, especially in highly regulated industries such as financial services. What is the key to a successful and effective relationship between the CIO and CCO, and how have you approached this at Deutsche Bank?
EJ. Maintaining an open dialog with our CCO and collaborating on short and long-term plans is essential. We make sure our objectives are aligned and that we are communicating a consistent message to our organization.

FST. With regulatory scrutiny becoming ever more stringent, to what extent would you agree with the idea that compliance is ‘the new business imperative’ – and not just for firms involved in financial services?
EJ. Regulatory compliance has always been a business imperative at Deutsche Bank. Its among our basic principles and part of our core values. I would agree that the level of scrutiny is heightened and not just for financial institutions. More and more, we hear and read about a variety of industries that are experiencing a greater level of oversight. There will continue to be heavy investments in this area.

It will be imperative that corporations develop compliance frameworks that are flexible and able to leverage systems across their organization.

FST. Is there a need for more coordination, both among financial market participants and across industries, on best practices for subjects as diverse as compliance management, business continuity, anti-money laundering, privacy and information security, risk management, etc.? How can greater cooperation be facilitated?
EJ. That’s an awful lot to digest and easier said than can be achieved. I believe coordination will be difficult given the different regulatory agencies and complexity of the respective regulations. Having said that, I do believe we can learn from one another and to the extent that we can leverage that learning to define some broad and common standards, we can all benefit.

FST. Increasing M&A activity is forecast to have a big influence on the US financial services landscape over the next few years. What issues need to be taken into account when aligning a new acquisition with the rest of the company in terms of technology and information systems?
EJ. Due diligence is an essential component for any potential merging entities to assess whether technology and information systems of the respective entities are scalable and complementary. Issues to be considered include: quick identification of those application that will not be part of the long term strategy of the merged entities; identification of potential exposures or risks resulting from systems and or processes noncompliant with respective regulations; and a well thought through plan for transition.

FST. Looking ahead, what items are top of your agenda for the near to mid-term?
EJ. SOX compliance, the Interagency Whitepaper on Resiliency In The Event of A Widescale Disruption and innovating our operating models to recognize and take advantage of synergies are all high on our list of priorities at the moment.