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Credit Suisse vows digital reform after dire year, reveals $3B IT spend

Credit Suisse said it was making progress on a “centralised chief technology and operations organisation” as it continues efforts to drive cost savings of up to $1.5 billion by centralising its IT function after a torrid 12 months.

The bank is now spending around $3 billion on IT each year, CFO David Mathers said on an earnings call, with Credit Suisse operating under a 50-50 “run the bank” vs “change the bank” split and vowing to improve agility while investing in risk technology and “automating across client journey to enhance client experience”

New Chief Technology and Operations Officer, Joanne Hannaford has been poached from Goldman Sachs to lead ambitious efforts for digital reform. The respected software engineer whose roles at Goldman included Global Head of Corporate and Operations Technology and Head of EMEA Technology started work January 1, 2022.

The bank posted net annual losses of $1.7 billion this week in the wake of scandal, litigation and a damning late-2021 report into its “hollowed out” risk function that said the investment bank “failed to invest in necessary risk technology” and blasted its failure to “prioritize and fund the technological investment necessary…”

Watchdog’s reports, fines reveal banks’ reliance on spreadsheets

Credit Suisse was badly exposed to the 2021 collapse of hedge fund Archegos, which cost it upwards of $5.5 billion. A July 2021 board report into its failure highlighted, among other examples, “a relatively inexpensive technology fix that had been proposed to correct for bullet swap margin erosion, but the business never executed on it” – and astonishingly how the bank in 2020 appointed a “marketing executive—with no background or training in leading an in-business risk function” to lead its PSR risk function when the previous leader died.

The bank has since had a sweeping leadership shakeup. As well as new CTOO Joanne Hannaford, pictured above, Credit Suisse poached fellow Goldman veteran David Wildermuth as its new Chief Risk Officer. Christine Graeff took over as new head of HR on February 1 and Chief Compliance Officer, Rafael Lopez Lorenzo was promoted from his internal audit role in Q4 2021. As Credit Suisse’s earnings show, they have work to do.

New CTOO to accelerate cloud migration

At an investor day on November 4, 2021, the bank announced a sweeping shakeup — exiting 10 markets, creating a unified Wealth Management division “to leverage a global integrated model”, simplifying its banking platform set up and vowing to also exit “non-core investments and partnerships” and suggested progress during its earnings call, while acknowledging that its IT transformation may take until 2024 to start paying off.

As part of its November 2021 shake-up it promised to integrate Group and Divisional technology and operations teams under the incoming CTOO, “harmonize unified client, banking and risk platforms across the bank” and “further strengthen our data capabilities, accelerate move to cloud technology and reinforce cybersecurity.”

See also: The Big Interview with JPMorgan’s Global CIO Lori Beer

(Current projects in February 2021 include plans to modernise “voice, video, email, messaging, and records management services for the firm”, building them around “modern cloud-based solutions”.)

Credit Suisse CEO Thomas Gottstein told analysts on this week’s earnings call that the bank was now investing heavily in risk, saying: “We are strengthening the risk culture with a much more disciplined approach around risk in both the first line and second line of defense, significant investments across risk and compliance, etc.

“And this all leads to — or led to a real slowdown in Q4 and has now been really embedded… laid the foundation for a very disciplined slow growth coming forward now in Q1 and beyond.”

CFO David Mathers added: “We are very focused on driving cost efficiency across our existing infrastructure and therefore, releasing reserves and resources for that investment program… we are running a 50-50 split in terms of using our current technology spending to both run the bank and change it.”

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