Credit Suisse seeks salvation in digital transformation
Troubled Credit Suisse has vowed to use a digital transformation programme to help it strip $1.3 billion dollars from its annual operating expenses and reduce its cost base to CHF15.5 billion ($16.1 billion) — as Chief Technology and Operations Officer Jo Hannaford aims to automate “[an] extraordinary amount of manual work.”
The move comes after the bank reported Q2 losses of CHF1.6 billion this week.
The Credit Suisse digital transformation will include “the simplification of front to back processes, reduction in manual data handling and duplication as well as increase the use of scalable cloud-based infrastructure” executives said in a press release. (Technology and ops currently accounts for 40% of the bank’s headcount.)
(CEO Thomas Gottstein fell on his sword after the losses – which compare with net income of $2.5 billion for the same quarter at Morgan Stanley, $2.93 billion at Goldman Sachs, and $8.6 billion at JPMorgan.)
Credit Suisse digital transformation priorities laid out by CTTO
Chief Technology and Operations Officer Joanne Hannaford was poached from Goldman Sachs to lead ambitious efforts for digital reform. She has some substantial work ahead of her. (The respected software engineer, who was Global Head of Corporate and Operations Technology at Goldman, started on January 1, 2022.)
She is building up in-house engineering expertise as part of a restructure — in a June 2022 presentation highlighting plans to build a more developer-friendly, less hierarchical “lean, agile, technical, accountable organization” and adding “we are placing an emphasis on attracting and retaining the best engineering talent, making Credit Suisse a destination of choice, where engineers will have outstanding careers [and] revisiting which activities we want to outsource, and what work we want to be delivered by our talented internal engineers.”
100,000 servers, 90,000 workstations, 37,000 databases…
In the June 28, 2022 investor presentation she also outlined opportunities to streamline Credit Suisse’s “fragmented” IT estate of over 100,000 servers, 90,000 workstations, 37,000 relational databases, 3,000 applications and 13 data centres, and prioritise creating an “engineering, solutions-driven culture; invest in an agile talent with an engineering mindset [and] build enterprise-scale, foundational technology capabilities.”
“Our scope includes the full bandwidth of a global universal bank for running 15 booking centres around the world for our wealth management business, processing 160 million daily client orders in our IB [investment bank] to operating 430 ATMs in Switzerland. This diversity of our business is a complexity driver, which has historically hindered enterprise platforms, front to back process harmonisation, and economies of scale. We now have one foot in the past and one foot in the future… We intend to further enhance our business platforms, enabling scalable front to back digital services, technology platforms and core capabilities.
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“These are going to be best of breed technology platforms driven by our newly hired CTO, providing enterprise capabilities and savings… we are now building enterprise-scale, consistently applied foundational technology capabilities, and are making these available to business-facing engineers to deliver software quicker, cheaper, and resiliently. Hence the economies of scale being realised… These benefits should start being seen in 2024. We are funding these technology platforms in part by reducing the manual work undertaken within the technology division and repurposing this to hire more in-house engineers” Credit Suisse’s CTTO said.
The firm meanwhile looks set to take an axe to its poorly performing investment banking segment, which generated a CHF1.1 billion loss in Q2 and had a Q2 cost income ratio of 195.7%, promising a “strategic review”.
CEO Gottstein is being replaced by Ulrich Körner, who joined Credit Suisse April 1, 2021, as CEO Asset Management. Körner joined from UBS where he served as member of the group executive board for eleven years, of which six years leading the Asset Management division. Prior to this role he served as Chief Operating Officer.
“The urgency for decisive action is clear and a comprehensive review to strengthen our pivot to the Wealth Management, Swiss Bank and Asset Management businesses, supported by a fundamental transformation of our Investment Bank, is underway” Gottstein said, adding “addressing our cost base remains a priority.”
As The Stack reported in February 2022, Credit Suisse spends ~$3 billion on IT each year.