Limited resources and increased quality requirements to the IT department characterize the banking market today. Undoubtedly, this requires optimization of costs and significant increase in the efficiency of the bank’s IT services. An important factor is developing the correct and timely IT strategy that would reflect the real needs of the bank.

BUSINESS THROUGH TECHNOLOGY

There is a direct link between the bank's overall strategy and IT strategy. The latter is based on the structure and main objectives of the business strategy; and IT projects reflect the main business strategy areas of a financial and credit institution.

According to Life Financial Group CIO Alexey Pirogov, IT strategy is the answer to the question how to solve business challenges and achieve business objectives through technology. Given this, it cannot contradict the overall strategy of the business.

Head of the System Administration Group of Bank DeltaCredit Andrey Stolyarov also believes that IT strategy mostly reflects business objectives. Technological effectiveness is both a consequence and a means of achieving the objectives. Ironically, the development of business strategy had considerable direct influence on technological effectiveness, emphasized the expert. 

Director of the Information Technology Department of Bank International Financial Club Vladimir Beskrovny agrees with his colleagues that strategy primarily reflects business goals. "Purely technological objectives are the reflection of business challenges and risks", he comments.

THE LOCOMOTIVE ROLE OF IT

Ideally, IT departments of banks seek to ensure that information technology become the longtime driving force of a business, but not an obstacle or a source of risk for the financial and credit organizations.

Banking IT experts are confident that IT not only can, but also should be a driver of development, especially in the current market conditions, when banks tend to increase the share of non-interest income by any means. For example, IT professionals of Life Financial Group hope that their cloud services sale project will evolve from the technological experiment into a business direction, thus allowing Life to generate more revenue.

According to Alexey Pirogov, IT can become an obstacle only if the bank does not believe in the implementation of certain business tasks. "Further on, everything depends on the culture of the particular financial and credit organization, says the expert. In Life Financial Group, for example, if we see additional risks in a particular business model, we always discuss these risks with the representatives of business explaining why a certain business idea may not "boom", and then we jointly look for ways to deal with potential problems".

Andrey Stolyarov (Bank DeltaCredit) is sure that in financial and credit organizations IT traditionally has a key influence on business, so a situation where IT becomes a catalyst or an obstacle for business processes occurs quite often. From his perspective, the reason for the locomotive role of IT is that the employees of IT departments have to be on opposite sides of the technology barricades, as opposed to business analysts who are focused only on specific areas.

The expert of DeltaCredit Bank names the following among the reasons hindering the development of business due to the fault of IT. Firstly, it is the low level of IT technological effectiveness. For example, he names overly decentralized IT infrastructure, the lack of virtualization and basic ITIL processes.

Secondly, it is the low level of business maturity. "If the business of the bank considers IT an absorber of time and budget, then the cool relations between them won’t let developing useful solutions", the expert warns.

A third complication factor is a low level of IT maturity and unskilled staff. "For IT department not to become the weakest link, it is important to build relationships with business units, as well as internal processes and procedures", concluded Andrey Stolyarov.

Vladimir Beskrovny (Bank International Financial Club) believes that information technology not only can, but also has already become a driver of business development. "It happens imperceptibly, every day, says the expert. Today some banks even position themselves as IT companies with a banking license".

IT SHOULD BE FLEXIBLE

It is logical to assume that in the process of IT strategy planning, some uncertainty may arise, for example, as to what is the timeframe for this or that project. It is important to maintain clear coordination between business and IT without breaking the interdependent processes.

Difficulties may arise if IT department has little time to implement what is written in the IT strategy, or if business changes its priorities. Both scenarios can be considered a standard situation. After all, not all IT projects are completed on time and within budget, like almost all other project in any other sphere of activity. It is a normal situation, when previously unknown business requirements emerge in the course of the project, and ready-made products undergo necessary business adjustments.

The resource requirements conflict may delay the implementation of some projects for the sake of others. Changes in timing and priorities are inevitable in everyday life. Adequate relations of IT and business require active expectations management and management of requirements for information technology.

IT strategy is closely linked to business strategy, and in business there’s seldom any definiteness, says Alexey Pirogov (Life Financial Group). "Of course, theoretically, IT strategy can contain the core, the platform that will support any business strategy. However, in my opinion, the time now is very dynamic. Banking IT should be prepared for a crucial change of business strategy in less than a month, or even tomorrow, when it would be necessary to start moving in the opposite direction", said Alexey Pirogov.

Andrey Stolyarov (DeltaCredit Bank) revealed a few rules of IT strategy planning that they follow in the bank where he works. First, business units should have close ties both in planning and in the implementation of initiatives. This will help justifying expenses and avoiding chaotic purchases. Second, in case of uncertainty you can always refer to the positive experience of other organizations. In this regard, reference visits to other companies are useful, he said. Finally, we need to account for uncertainty, that is to give some freedom to timeframes and provide several options for our actions depending on the key events happening in the business.

According to Vladimir Beskrovny (Bank International Financial Club), there are different ways of dealing with uncertainty in the IT strategy planning process. These methods include the use of agile practices in IT project management and development. Agile software development is a conceptual approach to software development. There are several methods similar to it.

Requirements to software change in the course of its creation, that is why the product and the system of its creation should be flexible to allow timely changes and inclusion of new requirements. Agile practices allow developing flexible software that meets the requirements of modern business.

LIVING STRATEGIES

Every bank develops its IT strategy based on its own goals and objectives. The new economic reality some financial and credit organizations continue to implement their current strategies, while others change or adjust it. For example, the International Financial Club’s IT strategy did not change because it has always been counting upon scarce resources. In the current situation, only the tactics and project financial evaluation parameters have changed.

IT STRATEGY OF LIFE FINANCIAL GROUP

Life Financial Group CIO Alexey Pirogov told about the development, timing and content of a new strategy for Life Financial Group IT unit.

At the end of 2014, due to changes in the economic situation, the Group decided to suspend until 2016 the implementation of the current IT strategy. This was because other priorities came to the forefront.
This year, IT department of Life Financial Group has the following objectives. Firstly, it aims to increase the effectiveness of IT processes and, consequently, to increase savings. Secondly, it is necessary to maintain the achieved level and to prevent the loss and degradation of the IT infrastructure. Finally, it is necessary to find a way to make money with the help of IT.

Life Financial Group has its IT strategy developed until 2017. The Gartner Company was the Group’s consultant in this matter, as they already cooperate for a long time. The priority development direction are infrastructure, security, and service and application management. Another important direction, on which the Group plans to concentrate its efforts, is the provision of cloud services to customers of the Group and the opportunity to earn with this service.

"It is worth noting that we came prepared to 2015, says CIO Life Financial Group. Particularly, I peak about our main and redundant data centers. They are served by our own service professionals and provide such a high level of key IT services availability that even in difficult times of today we can provide the service for our clients. Let me also note that in 2014 we have created our own private cloud management system based on Mirantis Open Stack. Our next step is to learn monetizing the accumulated potential and creating a set of cloud products both for ourselves and for our customers".