Digital transformation is one of those things everyone is interested in. It seems most have a good handle on the why but often not the how. I recently spoke with Miguel Rio Tinto, Group CIO of Emirates NBD, one of the oldest and biggest financial firms in the Middle East, on how they approach digital transformation.
Can you describe what digital transformation means to you and Emirates NBD?
Rio Tinto: Digital transformation is about change and speed. The banking industry is very competitive, and we need to keep up with smaller, more nimble financial firms, including FinTechs, but also keep an eye on the larger established ones. We are taking a two-pronged approach to digital transformation. The first being evolving IT and how we engage with our bank stakeholders. This means identifying new IT-business working models, identifying new technologies, and driving innovation into everything we do.
The other side of the coin is IT modernization. Technology is at the core of what we do in the bank. Think of IT as the factory that everything runs through, and we need to ensure that we are continually driving innovation to meet business objectives.
How are you addressing both sides of digital transformation?
Rio Tinto: The first thing we are doing is bringing more of IT back in-house. In the past, many financial institutions felt the need to outsource a lot of their IT functions and capabilities. Banks also used to think of technology as a commodity, and they tied themselves up in long contracts with systems integrators. All of this created a risk of being overly reliant on IT vendors. It’s my belief that if you want to be successful with digital transformation, you need to own the skills. Because of this, we are increasingly hiring in areas like software development, enterprise architecture, testing and automation.
Three years ago, we had a total IT staff of about 1,250 people with only around 300 of these as full-time, permanent employees. The other 950 were vendor and contractor resources. Today, we want to grow to about 600 internal, permanent resources with about 500 of these being engineering professionals. We will own everything from development to architecture and will be very fast and flexible.
How have you structured the IT organization to make the shift to being fully digital?
Rio Tinto: Emirates NBD introduced a chief digital officer to work with the business units and understand their goals. He is also responsible for engaging with other financial services companies to understand best practices and see how they are innovating. From there, we put together a plan that goes from developing new products to new distribution methods and increasing the efficiency of IT.
To date, we have spent about half a billion dirhams modernizing our systems and have identified five key areas to be successful with digital transformation:
Strong internal engineering capabilities. As I mentioned, we had to bring in a number of new competencies around engineering. This is now the core of what we do, and we have embraced agile IT to enable delivery. This meant organizing such delivery around small teams, known as squads. They are multi-disciplined and empowered to make decisions, so those decisions are made faster. We have also introduced product owners who were sourced from the business to work in our IT squads every day. They own the products and manage backlogs collaboratively with IT.
Cloud-native application architecture. The success of cloud-native companies like Google and Amazon has nothing to do with incumbency. These are companies with cloud-native software development methods. They’re agile, move quickly, and we want to replicate what they are doing. Web services, composable applications, containers, microservices, Kubernetes, and cloud-native clusters are all part of our application architecture now. The goal is to have less than 10% of our applications remain legacy within three years.
Modernized infrastructure. We need to implement next-generation infrastructure to enable our complex IT environment. IaaS and PaaS services are good for this, but in the UAE, banks cannot use public clouds and we want that level of agility. To accomplish this we have built our own private cloud completely on open-source tools, so if the UAE lets banks use public clouds, we can easily shift our environment over. The private cloud will give us the ability to scale up and down as needed.
New IT-business operating model. This involves rolling out agile as a standard practice and way of working with the business units. Our individual stakeholder departments, like retail and wholesale banking as examples, will make joint decisions with IT and provide daily feedback on the digital products being delivered for them through our dedicated product owners. This is a significant change, as the product owners sit with the IT teams to improve speed and efficiency and prioritize projects. Digital success is based on IT and business partnering, which will be a big change for many companies.
Integrated security. Information security can no longer be something that is bolted on after the fact. Rather, it must be embedded into all of our processes and products. This includes new technology, such software-defined firewalls, but also a large amount of user training. Through ongoing training, Emirates NBD employees are much more aware of phishing risks, and we conduct simulated, email-based phishing attacks on a regular basis to continue increasing this.
As part of the new tools, we are leveraging artificial intelligence (AI) for new capabilities. AI is now doing database monitoring to detect patterns for fraudulent access. When the AI sees irregular patterns, it can highlight these as possible risks.
We are also leveraging our cloud platform here. We built a central log from our infrastructure and are using AI to identify fraud or security risks. We currently have several models running to identify fraudulent accounts.
How are you driving innovation internally?
Rio Tinto: We are increasingly focusing on driving internal innovation, not just across IT but across the entire bank. Within IT, this is one of the most critical capabilities we look for when recruiting. More than half of our IT staff are new, and we are still actively trying to attract talent from the local and international market. Dubai is a very attractive city, and we are aiming to become a leading digital city. Our government is very active with digital initiatives and sets a good benchmark for companies in the city.
For over five years now, Emirates NBD has held an internal innovation contest where any employee can pitch an idea to enhance either the customer experience or our internal processes. One fantastic idea was to offer customers a global cash card with multiple currencies. People can carry this from country to country and not worry about paying foreign exchange fees. We have implemented several other ideas and have more underway.
Is there anything else you feel is important to success?
Rio Tinto: One of the most important factors is buy-in from executives. We have tremendous support from our board of directors and group CEO, as they believe technology is at the core of the bank and will continue making us successful as one of the region’s leading banks. Innovation and digital go hand in hand, and that will continue to be driven through the organization’s culture from the leadership down.