Interview: David Weymouth, operations director at RSA

Finance IT systems

The banking sector has come under fire for having overly complex systems, which risk causing further large-scale outages such as the one experienced by RBS. Trade body Intellect has even called for regulators to force banks to overhaul complex IT infrastructures.

Given that Weymouth worked at Barclays for several decades, and headed up the bank’s IT strategy, does he also believe that the complex layering of systems is in need of an overhaul? “The simple answer is yes, they are too complex,” he says.

But Weymouth believes there is no easy fix-all solution. “Wherever you go, nationally or internationally, banking moves money around the world. Even in China, where they are all state owned, a level of connectivity between institutions is required, which means you do get big shared infrastructure. So more of banking is shared and standard than I think most people appreciate.

“The difference in insurance is there are very few pieces of shared infrastructure because the industry has never operated in that way – it has never provided a common utility to society, so it is a thin layer of shared infrastructure.

“Both industries have done a lot of consolidation. I would say the banking industry has rationalised systems faster than insurance. But whether it has done it fast enough is another question.”

But moves to entirely new standardised platforms have not worked to date, he says. “Interestingly, every single project to migrate or converge, whether it’s Tesco, Co-op or Nationwide, has taken massively longer and cost massively more than originally expected. That tells us going for a single platform doesn’t reduce all the complexity because you still have to hook into the payment systems and the enterprise systems.

“I don’t think there is a silver bullet and the thought of government intervention or regulatory intervention is truly scary.”

Managing IT spend

One challenge facing the management of IT has been the consolidation of the supplier market, he says.

“You wake up each morning and find what used to be independent technology increasingly goes to IBM or Oracle. And if you don’t understand how that has developed you are going to miss a trick. Getting behind the economics of the changing landscape is really important, as you would think buying from fewer suppliers would give you a greater advantage, but that is often not necessarily the case.

The onset of multichannel customer interaction over multiple devices has hit the industry hard, he says. “If you had not worked outside the industry you might have been slow in recognising that, because it has hit other industries so hard and so fast.”

But the real issue is what Weymouth terms “infrastructure engineering”.

“The underlying level of technology architecture has been inadequate and you find that a consistent theme,” he says.

Previously the insurance sector spent around 3% of budgets on IT, compared with the banking sector which typically spent around 12%. That is slowly increasing, but is still in the low single digits, he says.

“The bits of technology that are hardest to justify in this industry are parts of the core infrastructure, for all sorts of reasons, but mainly because they don’t show such obvious payback as those [that directly affect how much you pay out in claims].

“Doing a big finance system, big human resources (HR) system, communications programme is tougher to justify. It doesn’t mean that you don’t do them, but in some industries they are taken as a given, such as manufacturing.”

Despite savings promised by moves to the cloud, he says this is no guaranteed solution for smarter spend. “Things like cloud are important, but to a certain extent it’s old wine in new bottles. There has been some naivety in the belief it means cheaper, but that is not the case. It’s a different economic model.

“There are very few things that can’t physically be done because of the availability of massive storage, massive process power, big bandwidth – it’s an economic call.

Wherever you go, nationally or internationally, banking moves money around the world

David Weymouth, CIO, RSA

“Of course, it is not in the technology suppliers’ interest to spend less on technology. What they like you to do is spend as much but differently.”

As such, a key challenge for the IT department is managing consumption. “A lot of it is about making the economics transparent and giving people choices.”

The company has a few hundred staff in its UK IT and change team. In most geographical regions the company operates a mixed model when it comes to outsourcing. “What we are increasingly trying to do is retain the intellectual end of the strategy and some of the architecture and design.

“If I had a choice I wouldn’t do very long-term, transitional, transformation contracts, but sometimes you have to. That’s another instance where the world has changed. Signing up for 10-15 years is now a very difficult model to live with.”

So what does he see as being the crucial challenge to the next generation of IT graduates?

“The key is the ability to deal with the lack of certainty, because even planning for three years is quite challenging. The ability to be relatively light on your feet and being sensibly reactive is critical.

“I don’t like the phrase 'big data', but the massive availability of data and ability for people to organise and analyse it is probably going to have a profound effect, not just on the industry but as a whole. And I haven’t quite got my head around that,” he says.

 “My own belief is that providing training [for RSA’s 14 IT leaders] will deliver value into the business long after I’m gone.”