CIOs, Capital Markets and the Cloud: Being a CIO

Robert Garrison, CIO, DTCC

Robert Garrison, CIO, DTCC

The role of the CIO has evolved dramatically over the past few decades from being purely technical to running key functions that act as a key nerve center of the organization and help fuel business growth. As CIO of The Depository Trust & Clearing Corporation (DTCC), an infrastructure provider to the global financial services industry, I focus on driving strategic initiatives that foster innovation while effectively managing risk and security. Regardless of an organization’s focus or size, a firm’s IT strategy must align with and be supportive of business goals to ensure operational excellence as well as return on investment.

"Cloud will continue to be a game changer as more financial institutions embrace the technology"

Being a successful CIO is about delivering operational excellence—making sure the “factory floor” runs flawlessly every day and meeting all of the security and regulatory requirements of the evolving world. But it is also about driving modernization and innovation, working in partnership with business executives to ensure that we are leveraging new and existing technologies to drive the achievement of corporate priorities. After all, an organization’s technology strategy must be firmly aligned with and support business strategy—and it is the CIO’s responsibility to ensure that happens.

The Importance of Technology in Today’s Landscape

Today, new technologies are transforming industries, particularly in finance where IT plays an essential role in the success of organizations. Technology is changing at a rapid pace, creating opportunities and challenges, so it’s not surprising that those who work outside of the function sometimes find it difficult to fully understand its complexity. Firms must break out of a siloed approach and ensure their C-suite and senior leaders have comprehensive knowledge of IT initiatives. This understanding enables the CIO to focus on a strategy that is agile and supports an ever-evolving industry, while embracing innovation and managing risk.

At the same time, CIOs need to actively demonstrate ROI. By doing so, organizations can better maximize the value and opportunity at a business level or change course as necessary. It is, after all, the CIO’s responsibility to effectively communicate the successes of initiatives, as well as identify areas of improvement. This can create trust and understanding within the organization.

Technology on the Rise

So where are CIOs and their teams focusing from a technology perspective? With digital disruption on the rise and the influx of new technologies, it’s no wonder that many companies are uncertain about where to invest scarce resources.

First, firms should ensure that they are exploring cloud computing, which has finally reached a tipping point in financial services as scalability, resiliency and cost savings have improved. With the worldwide public cloud services market projected to grow 18 percent in 2017 to total $246.8 billion, up from $209.2 billion in 2016, according to Gartner, Inc., the choice in cloud offerings will continue to grow. I continue to believe there is significant opportunity across all industries in cloud technology. Cloud delivers a myriad of benefits, including innovation and time to market, often at a lower cost. More importantly, by being able to transition from what has historically been a capital expense to an operating expense, organizations have increased financial flexibility and can better adapt to shifting priorities. Cloud will continue to be a game changer as more financial institutions embrace the technology.

Another growing technological trend that is impacting the industry is automation in the form of machine learning and robotics. This is an area where firms can realize significant cost savings and mitigate risk as well as potentially create new business opportunities.

Of course, the most discussed and hyped technology in recent years has been distributed ledger technology (DLT), or blockchain. At DTCC, we believe that DLT presents a once-in-a-generation opportunity to re-imagine and modernize market infrastructures to address certain targeted operational challenges. Within our firm, we have focused on manual asset classes, providing us with the opportunity to learn the advantages and limitations of the technology.

We, at DTCC, currently have two DLT initiatives underway—one focused on the derivatives market and the other on repurchase agreements (repos). Leveraging an agile development approach, both projects are progressing well, with the derivatives solution now in development. We see many more use cases where this technology can further improve efficiency and reduce costs and risks in the post-trade process.

Beyond the Organization

Once a firm determines the right mix of technology and process to support business objectives, it’s important that they look outside their organization to industry consortiums to foster collaboration and leverage diverse backgrounds and expertise. Collaborative industry efforts like the open source Linux Foundation Hyperledger project, where subject matter experts are determining how to best capitalize on DLT, are forging standards and shaping best practices. DTCC is a member of this project and we are very supportive of open source efforts. These types of collaborative efforts are critical to adoption, especially with any new technology.

In the months and years ahead, CIOs must continue to assess how we can optimize and further improve the value of the IT infrastructure across the industry. Many CIOs that I’ve spoken to share common objectives, and the recent movement toward disruptive technology coupled with a collaborative approach will further enhance our ability to harness innovation to its fullest potential while driving continued improvements across organizations and industries.