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Introduction:

This week I’m joined by Sangy Vatsa who is the EVP and Chief Information Officer at Comerica Bank.

In our discussion, Sangy outlines how digital transformation came to a 178-year-old bank. As part of that transformation, Sangy shares the details of their Tech Vision 2020 initiative along with their two-in-a-box and ALEX models. Using these models, we discuss how Comerica went from 0 to 100 applications in the cloud in only 9 months.  Sangy covers how they did this, what they learned along the way and what they now have planned for Digital 2025.

 

Links:

Sangy Vatsa LinkedIn: https://www.linkedin.com/in/sangy-vatsa/

Comerica Bank: https://www.comerica.com

https://soundcloud.com/cioitk/leading-digital-transformation-in-a-financial-institution-with-sangy-vatsa-cioitk-27/

 

Episode Transcript:

Tim Crawford:               Hello, and welcome to The CIO In The Know Podcast, where I take a provocative but pragmatic look at the intersection between business and technology. I’m your host, Tim Crawford, a CIO and Strategic Advisor at AVOA.

Tim Crawford:               This week, I’m joined by Sangy Vatsa, who is the EVP and Chief Information Officer at Comerica Bank. In our discussion, Sangy outlines how digital transformation came to a 178-year-old bank. As part of that transformation, Sangy shares the details of their Tech Vision 2020 initiative, along with their two-in-the-box and Alex models. Using these models, we discuss how Comerica Bank went from zero to 100 applications in the cloud in only nine months. Sangy covers how they did this, what they learned along the way, and what they now have planned for Digital 2025. Sangy Vatsa, welcome to the program.

Sangy Vatsa:                 Thank you, Tim. Glad to be here.

Tim Crawford:               Sangy, you’re the CIO for Comerica Bank. Maybe to set a little bit of a foundation for our conversation today you can talk a little bit about who Comerica Bank is and your role in regards to transformation at the bank.

Sangy Vatsa:                 Great. Tim, first of all, I appreciate this opportunity to join the session and to be able to share my thoughts with your listeners. I would also welcome any feedback or any better ideas we can get from your listeners that we all get to learn from each other. Comerica Bank is a financial services institution. It has business offerings of products and services in commercial bank, retail bank, and wealth management. 170-year-old bank headquartered in Dallas, Texas, and its technology headquarters are in Detroit, Michigan area.

Sangy Vatsa:                 I’m the chief information officer of the bank as you said, primarily responsible for technology and digital transformation of the bank, in addition to cybersecurity, information security, and technology risk management. Been in the industry for 30 years spanning across financial services, automotive, travel, and tech industries. So I joined the bank in February of 2016, and then the ask from the C-suite was to transform the technology and digital capabilities of the bank. At that time we have a burning platform as the bank’s financial results had fallen into the bottom quartile as compared with the institutions that we benchmark. Our independence at the company was being questioned.

Sangy Vatsa:                 As I said, we are 170-year-old bank with a rich heritage. The bank is known for cultivating and nurturing rich relationships with our colleagues and customers. The entire leadership of the bank rallied and teamed up and made a strong call for change, and then call was to really uplift the revenues, optimize the cost structure and elevate customer delight while staying highly secure and compliant. And the digital transformation was at the middle of that change that we undertook, and I was fortunate to co-envision, co-shape, and co-deliver this change along with my peers. That was the genesis of that digital transformation journey. If I can expand just a little-

Tim Crawford:               Sure.

Sangy Vatsa:                 The transformation journey that we undertook began in 2016 through transforming the bank’s product delivery approach, uplifting its technology assets, and most importantly, investing in our people to become a leading digital provider of choice for our colleagues and customers. Our comprehensive technology strategy Tech Vision 2020 was established at the time and the roadmap was laid out that was executed with speed and agility over a two-and-a-half year time frame. The business outcomes of this transformation is, I’m sure your listeners are here for, that I would feel were quite impactful. Our financial results moved from the bottom quartile to the top quartile, and for many of the measures like return on equity and efficiency did show we were best amongst the benchmarks.

Tim Crawford:               Wow.

Sangy Vatsa:                 Furthermore, the measure like customer satisfaction and net promoter score saw a significant rise, so overall, we felt good with that change.

Tim Crawford:               No, that’s great. And it’s a lot of work, and one of the things you and I have talked a little bit about in the past that often comes up when we talk about transformation is, this isn’t a one-man show. It’s not one person that does all of this, it takes a village, and you’ve done that with your work at Comerica bank where you’ve brought in other stakeholders and other players into the mix. Maybe take a minute and share with the audience what you’ve done from the perspective of bringing in that village into the transformation effort.

Sangy Vatsa:                 And that’s a great question, and I would say not only was I fortunate to be surrounded by a lot of very knowledgeable, smart people, the word of mouth also worked in our favor and we were able to have people within the bank who came together to work on this cause and then we were able to attract some talent from outside. And as the first steps, in 2016 we rolled out two-in-a-box product co-creation model. This is something we created inside Comerica, something that has received recognition in the industry. There’s been a publication on this model, as well. But two-in-a-box fundamentally changed how digital capabilities were delivered to our employees and to our customers, and both the technology teams and the business teams had joint accountability and shared goals.

Sangy Vatsa:                 This approach essentially showed that for every critical product that was launched there was a technology-savvy business product leader, and a business-savvy technology leader co-shaping and co-creating these products. So even though this could have been perceived to prolong the development process, it was in fact a strong illustration of how, through building partnerships and timely collaboration we can raise performance expectations and facilitate in a way that business outcomes. Two-in-a-box, to me, is both an art and science, and is now part of banks’ products and services development operating model. While at the core, this model is grounded in collaboration and relationship, it is comprised of four million industry spent components that essentially codify what two-in-a-box models mean.

Sangy Vatsa:                 Maybe if I get a chance later, I’ll expand on those four components of two-in-a-box model, but as you said at the beginning, it takes a village to drive a change of this kind. We were absolutely very fortunate for the leadership across the bank to come together and be able to change the vocabulary of the bank with this approach. Everybody strongly received it well, and became a strong follower and enhanced outcomes that we were able to get to.

Tim Crawford:               No, that’s great. And I do want to jump into two-in-a-box and talk a little bit more about that. But before I do, one thing that you mentioned is how you brought in both the technology teams as well as the business leaders, as well. How did you do that, because I can see some folks listening to this, going, “Okay, that sounds easy to do, but we don’t necessarily have those relationships in place.” How did you find success in doing that?

Sangy Vatsa:                 Yeah, I would say a lot of that goes back to the fundamentals of, when you step into the shoes of your peers and other colleagues and you really take the time to understand what are their goals, what are their pain points, what are the drivers driving their strategies, you not only internalize what are the things that you have within your background that you could bring it to the forefront to help them meet those goals, but you’re also building a very, very strong support structure, and people are really reaching out to each other in a very unconditional way to help out the broader cause. And to me, that was a [inaudible 00:08:13] when I joined the bank, whether it was the chief marketing officer, whether it was the head of retail, whether it was the head of risk management, or the head of treasury, to really take the time to understand what their needs were.

Sangy Vatsa:                 And I was in many situations able to go and shadow our contact center professionals, our relationship managers. Once you see the world from there, you’re able to really rally your own team to create products and services that really cater to the needs of our colleagues and customers. And when those things came together, there were days when we were working really long days and nights on launching some products, but at the same time there was no issue of asking for help. Help was flowing in a very seamless way, and to me, that was one of the real foundational blocks of creating those kind of handshakes to co-deliver value that we had made it part of our shared goals.

Tim Crawford:               Right. But you also talk about how you’ve stepped into their shoes. It’s more than just a handshake and a relationship, you’re putting yourself in their perspective and understanding where they’re coming from.

Sangy Vatsa:                 That’s absolutely the case. And as I said, it just takes that sincere effort on both sides, and we’ve had examples where the chief marketing officer of the company in a town hall, in my town hall, has presented a tech strategy and I have presented the marketing strategy to our colleagues, and I think we both were able to do it reasonably well just because we took the time to understand that one important aspect.

Tim Crawford:               No, that’s great. And it’s great to hear that, that kind of collaborative effort between both IT and those outside of IT. But let’s maybe talk a little bit about IT specifically and some of the changes that were required within your own organization. How did that come about, and what were some of the changes you saw and kind of went through as you developed and then started to execute on this transformation journey within your own team?

Sangy Vatsa:                 Yeah, Tim, I would say, I think one of the things we did right at the beginning in 2016 was to establish a guiding principle for the technology organization of the bank. Our guiding principles are not sometimes seen as most flashy or modern things to do. We felt once we have some foundational things in place where everybody can rally behind the guiding principles, that could become a foundational block for the transformation that was to follow. So we laid that out in 2016 right before we undertook this digital transformation, and that guiding principle essentially focuses on delivering customer-centric products and services with speed and agility and with better security and architecture at an optimal cost by developing and leveraging our talent ecosystem.

Sangy Vatsa:                 So there are basically five components to the guiding principle. Customer centricity, speed and agility, security and architecture as a built-in construct, not as a bolt-on that usually becomes very expensive. And then optimal cost, not least cost, what you pay is what you get. And finally, leveraging your ecosystem, which is comprised of not just your employees, but your industry partners you work with, the suppliers you work with, the universities you work with. So that was at the core of the transformation. And during this time, we’ve launched a new methodology called Alex, that’s Agile Lean Execution is what it stands for. That’s a new technology delivery methodology essentially codifies the two-in-a-box principle that I talked about earlier, and it kind of cultivates a digital dexterity across product teams.

Sangy Vatsa:                 So Alex is comprised of four industry best practices in our design thinking that essentially drives empathy. A lean startup for number two, that essentially drives appropriate modularity. Number three, Agile, which drives the speed and agility practices across the product and services teams. And finally, DevSecOps, which drives the required level of accountability. So that was the construct that we kind of launched. Alex is out now for our digital delivery methodology at the bank. And then the new digital technology introductions and the Alex methodology that we launched draws the fast fail learn fast approach, much like any startup, and we cannot talk about this [inaudible 00:12:25] fail fast, learn fast, and don’t repeat the thing issue, and these began delivering proof of concepts and minimal viable product instead of full product rollouts so that they could learn quickly, address critical issues up front, and kind of provide value [inaudible 00:12:39].

Sangy Vatsa:                 This was, to me, a significant change moment for the organization, both the technology and the business teams kind of had to learn to deliver product in smaller chunks, challenge the processes that may have become status quo. Test those ideas frequently and then go back to the drawing board if needed. And then I would maybe highlight one other aspect of what had to be done in the technology team that I felt was very transformational at the bank was this major effort we undertook from Comerica’s Cloud First strategy. The idea of being a financial services institution, we might have to be well-prepared for undertaking any of these opportunities, so migrating the majority of our applications and services to the cloud disrupted, actually, traditional ways of thinking and transformed the way we kind of viewed applications and infrastructure.

Sangy Vatsa:                 We’ve been recognized an industry for building a unique, scalable cloud computing model. In the past we were limited by each application’s architecture and it was challenging to manage, scale, and configure it with other applications. Through moving to secure and integrated cloud computing, we have now improved our speed, agility, and efficiency. So overall, it has been the bank’s much needed capability to enable agility and on-demand scalability, and it has given us a way and a mechanism and a platform to deploy a number of business value capabilities and other in a short time frame, in addition to moving a number of our applications to the cloud.

Tim Crawford:               And I want to maybe double-click on that a little bit, because I think this is an area that some might say, okay, wait a second, hold on. You’re talking about a bank here. You’re talking about a heavily regulated, heavily compliant required industry. How in the heck did you get around the regulators and the requirements, and still ensure the highest level of cybersecurity, while still bringing in things like Agile, things like cloud into the mix? I mean, it’s great to hear that you’ve been able to do it. I think it’d be important to maybe expose, as much as you can. I obviously don’t want you to expose things that are privileged, but maybe share with the audience a little bit about how you were able to do this, because I think that is just absolutely fascinating.

Sangy Vatsa:                 Yeah, you know what? So we did not have to go around any of the key stakeholders. This goes back to the foundational aspects of our collaborative approach. I mentioned about stepping into the shoes of various stakeholders and understanding what their strategic needs are, or making security and architecture as a quote part of your guiding principles. It has to be vetted not as a bolt-on, and those two aspects really helped us out. So if I think about from the standpoint of the regulators, before we went to the C-suite or before we went to the board, we actually reviewed our approach of how do we build a secure cloud platform with the regulators? And we really built a strong understanding on both sides. We understood what the needs were, we were able to articulate how we will ensure that the offering that we would put forward will provide a better security than what we had in place, and then also ensuring that security at every level of that architecture was well-articulated and understood by both the engineers and the people who would be deploying and operating those in production.

Tim Crawford:               That’s [crosstalk 00:15:55].

Sangy Vatsa:                 We did put an extra layer of security in this architecture. We were also able to articulate the security offerings from the public cloud providers and how collectively it became a very strong construct. Now once that happened, we also classified all our tech assets that were migrated to the cloud in three categories of high, medium, and low risk, and then we actually did the disposition of every asset against that security restriction of high, medium, and low risk relatively easy for us, so it was a lot of hard work that when we went from zero apps to 100 apps in the cloud in about nine months, that was basically kind of a foundational blocker. We had the right level of classification and disposition, and the right level of alignment with stakeholders and all the data [inaudible 00:16:39].

Tim Crawford:               Wow. And one of the things that I’m really kind of getting from this is, when you talked earlier about the ecosystem and thinking about all of the different players in that ecosystem, it sounds like to you, regulators are part of that ecosystem.

Sangy Vatsa:                 Yeah, they’re a very important part of the ecosystem, and they’re there to really do the right things for the environment. Once we understand what their drivers are, you can not only satisfy the drivers, we can also anticipate what are some of their emerging needs.

Tim Crawford:               No, that’s great.

Sangy Vatsa:                 To design for those needs early on can then be very helpful.

Tim Crawford:               That’s great. And I love the way that you’re kind of bringing things together. Maybe I’ve just had a little bit of benefit of some past conversations that you and I have had to understand this in more depth, but I love the way that you’ve approached this problem, because it is a problem that everyone is trying to grapple with, but struggling in different kinds of ways. As we kind of maybe shift gears a little bit into what you’ve learned through this process, you’re now a few years into the process. There must have been some things that you’ve picked up along the way that you look back on and go, “You know, if I were to do this all over again, this is what I would do differently”, or, “Here’s something that I’ve learned from this experience.” What are some of those nuggets, some of those takeaways that you’ve picked up along the way?

Sangy Vatsa:                 Tim, I would say, while we feel very good about a number of transformational outcomes. I mean, if I think about launching 40 new digital technologies in a period of two and a half years or from a technical standpoint, building that level of dexterity to be having these modern platforms for all aspects of what we do as a business, whether that’s for a core loan management business, customer relationship management, treasury management, fraud prevention, case management. In all of these capabilities that our business relies on day in and day out, for really enabling real time payments into our portfolio, or really transforming our contact center. So there’s some of the best in class AI automation has been put in place where our net promoter scores are rising significantly, and voice biometric capabilities are now becoming part of standard adoption model.

Sangy Vatsa:                 Those things make us feel really good, but any change of this level is never easy, and these changes kind of teach many lessons, as you said. They drive new improvements, but they also teach us lessons. And I would say while the two transformation principles that we followed, excellence and perfection, and as I said, fast fail and learn fast, the fast pace of change that we went through, and that was needed to launch these capabilities based on the burning platform that we were facing, and was required to reduce our operational risk it actually also caused fatigue and pockets of user experience issues.

Tim Crawford:               Hmm.

Sangy Vatsa:                 And I would say, admittedly, we could have been more sensitive to change management and the rollout of new approaches. The team, however, worked extremely hard, collaboratively with various stakeholders including technology suppliers to undertake several improvement. Now these actions have been implemented in many cases with a long-term focus to sustain progress in the coming years. And with the, I would say the proper planning, active use of the two-in-a-box co-creation model and regular communications, we aspire to continue with the level of significant growth opportunities for the time.

Tim Crawford:               No, that’s great. So as we kind of look forward here, Tech Vision 2020 has been a key part of your strategy, and strategy for Comerica Bank. Where are you today with that strategy, and what’s coming next?

Sangy Vatsa:                 Yeah, so Tech Vision 2020 being our tech strategy for the bank, which was established in 2016, and we had two key pillars of Tech Vision 2020. One was to strengthen the core, and second was to transform our future. So while strengthening the core had key priorities such as high systems integrity, industrial-strength cybersecurity, competitive talent management, and transforming a future had some of the priorities like financial price scale, omnichannel architecture, cloud computing, and advanced analytics. So while the strategy has enabled the bank’s digital transformation journey, we are further evolving with eye on 2025. And there are three major factors we have considered as we develop our next evaluation of the strategy.

Sangy Vatsa:                 The first is elevated digital expectations. So this is, when you look at today’s customers and colleagues are expecting the same experience as they have the technology in their personal lives, I think, and they use day in, day out, whether they’re commuting, they are doing other kind of digital commerce. Secondly, the cybersecurity threats and the changing aspect of cyber landscape requires us to stay ahead by continuously evolving our cyber footprints and these data privacy and compliance regulations. And the third step is the emerging technologies and the consequential impact of these technologies on banking. We want to be ready to seize the opportunities that these new emerging technologies like what’s happening to blockchain, what’s happening with AI, machine learning, what’s even starting to trend with quantum computing and [inaudible 00:21:49] and usher a new era of innovation at that time.

Tim Crawford:               No, that’s great. And I think this represents a great case study of transformation, especially within a highly regulated industry over the past four years, going from 2016 to 2020, and then also what you’re looking for now, going into 2025. As we kind of wrap on this episode, what excites you most? From the role of the CIO, being a CIO, what excites you most as you kind of look at where you are today and what’s coming down the path?

Sangy Vatsa:                 Yeah, what excites me is to be a core member of a company’s effective leadership team and to be able to envision and deliver bold and tech transformational changes which are powered by technology and delivered in partnership with all the major stakeholders. To me, technology and digital transformation are enabled by this role, and I’ve been fortunate to do so in kind of strong partnership and strong support from my people. And I did want to also add to that is that in order to kind of realize our vision of becoming a fully digitally enabled, kind of a data-driven relationship bank. We are now introducing a core mode of our digital delivery. I’ve talked about two modes of strengthening the core and transforming the future, the core mode that we’re introducing is called constructive [inaudible 00:23:10].

Sangy Vatsa:                 Now this mode will allow us look at ways to construct the way the [inaudible 00:23:14] interplay still business models that we have in place within the greater models, and then reflecting on the Tech Vision 2020 performance are kind of trimodal fillers, these three modes that I’ve talked about, and kind of the digital centricity of a new strategic goal of being digitally enabled and data driven. We’ve named them the evolving technology strategy of the bank Digital 2025, and we plan to launch it in 2020.

Tim Crawford:               That’s great. Sangy, thanks so much for taking part in the program today.

Sangy Vatsa:                 Tim, thank you for your time, and wish you all the best.

Tim Crawford:               For more information on the CIO In The Know podcast series, visit us online at cioitk.com, or you can find us on iTunes, Google Play, and SoundCloud. Don’t forget to subscribe, and thank you for listening.

 

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