TAdviser Interview: The chief information officer of VTB Sergey Baranov - about priorities of technology development
The VTB bank completes accomplishment of three years' IT strategy and sets new tasks. The chief information officer of VTB Sergey Baranov in an interview of TAdviser told about key conversions of the last years, methods of reduction of an indicator time-to-market and the new directions of development in the field of IT.
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In 2019 the three years' strategy of VTB approved in 2016 comes to the end. Accession of ex-VTB 24 to VTB was the key project of strategy. What key results of consolidation at the level of information systems?
Sergey Baranov: In 2019 we complete accomplishment of our IT strategy of 2017-2019. All key purposes which we to ourselves set are reached. It is important to emphasize that customer needs and expectations of our internal business customers to IT in general during this time changed. Especially it concerns reliability and fault tolerance of our solutions, service rate and an output to the market of products. Therefore in 2018 we at the same time implemented the tasks set earlier and worked for perspective.
Accession of ex-VTB 24 to VTB became one of the most milestone events of this period, of course. On the updated platforms and IT systems the given more than 19 million clients, more than 50 thousand employees, over 1600 sales points migrated.
Consolidation affected our business indicators positively. So, the number of users VTB online for 2018 grew by 1.5 times, to 6.4 million people. At the same time more than 80% began to use from them for performing banking transactions mobile devices. The share of online users for the first time in the history of VTB exceeded a half from the total number of active clients. For the last year issues of online deposits and the credits increased several times. Development of functionality led to growth of a median number of transactions on one user - from 10.2 to 12.4 and also to improvement of key indicators.
Since January 1, 2019 corporate and retail regional networks of VTB were joint. The continuity of customer service in all sales points which entered perimeter of conversions is provided. Large-scale work on creation of the concept of target architecture of regional network is carried out. Therefore it is going to update more than 30 information systems of bank.
What system was selected from quality of the uniform core banking system and why? What plans for its further development?
Sergey Baranov: It is necessary to understand that the IT landscape of VTB historically developed due to integration with other large banks (ex-VTB 24, Bank of Moscow, etc.) which had IT systems and IT infrastructure. Therefore the issue of consolidation of an IT landscape - complex also requires detailed study. At the end of 2018 we defined the key directions of development of IT architecture and approved the list of actions for all business lines.
The decision was made that we will have several core-banking of systems. So, for example, for the corporate block as the direct the automated banking system (ABS) M-Bank is selected. The reason is simple - it is our own development. We create competence on its development. Besides, since 2017 M-Bank successfully underwent certification and is entered in the register of the domestic software. In 2018 the first step of consolidation of the core banking system of corporate business is implemented – migration of the core banking system of the Northwest regional center on M-Bank is carried out. The same core banking system together with TI+ is selected by target for SMB. In a retail segment we decided to concentrate efforts on development of the Profile system.
Whether it was succeeded to build single systems remote banking (RBS) for physical persons and legal entities? What did the main difficulties consist in? What plans of further development of these systems?
Sergey Baranov: In 2017 we started the big project on creation of the updated RBS for legal persons. It was based based on flexible methodology of project management (Scrum-of-Scrums), however quickly enough we saw that this choice was non-optimal. Therefore quickly analyzed a situation and reformatted our work. As a result by August, 2018 we created other RBS platform, began to connect the first clients, to test and implement the updated functionality. For May, 2019 more than 1000 companies are connected to DBO2.0, the personal account is updated, such options as opening of accounts, ruble and currency settlement and cash services, currency exchange control, etc. are available. In September, 2019 we are going to connect more than 50 thousand clients, and until the end of the year – over 200 thousand. As for RBS for retail business, we complete design of the solution on microservice architecture therefore details and parts we will be able to provide later.
The banking market for the last years is puzzled with reduction of an indicator of time-to-market. Whether there is such task you and how it affects approaches to development of information systems?
Sergey Baranov: Fall forward and reduction of T2M is a global trend which is caused by change of client preferences. Clients want to receive services quickly, at any time and practically from any geographical point, well and the main thing – is qualitative, safe and convenient from the point of view of the user. We see it on the multiple growth of transactions and transactions in our remote links.
To manage the speed of delivery of IT result we, first of all, pass to in-house to development and use of methodology of DevSecOps. It is flexible and continuous process of implementation of changes cross-functional (business and IT) commands with simultaneous observance of requirements of information security. In DevSecOps perimeter five retail IT systems, such as Single frontal solution, VTB Online, corporate website, etc. In the short term this process will extend on IT systems of corporate business. Time of implementation of IT result thanks to DevSecOps will be reduced by 30-70% depending on the IT system. One more important stream – creation of loosely coupled microservice IT architecture of the last generation and automation of providing infrastructure capacities that will also allow to increase the speed of IT changes significantly.
Whether it is possible to combine problems of fall forward and reliability with need of import substitution? What import-substituting projects are for you priority?
Sergey Baranov: Import substitution is one of key priorities of development of the state and business. On the one hand is a consecutive process of creation of tools for leveling different geopolitical and business risks. With another – the mechanism which will stimulate development of IT competences and the IT industry in the country in general. Certainly, time, resources and the general coordination which is provided so far by the state are for this purpose necessary. It is still difficult speak about a combination of speed of delivery of IT results and import substitution. It can be made at the subsequent stages - after expansion of the list of the Russian software, improvement of its functionality, decrease in its cost, etc. So far the main focus is concentrated on development and discussion of mechanics of process of import substitution.
In the IT block there is a separate management occupied with digital transformation. What its priorities? How the line between digital transformation and informatization is drawn?
Sergey Baranov: Yes, really in department of IT there is a management of digital transformation which specializes in work with the innovative technologies. Here IT competences in such directions as a blockchain, biometrics, artificial intelligence, Internet of Things and many others are concentrated. Our colleagues actively study all new products in terms of their potential application and pilot solutions in a format Foresight projects. Depending on the received results the decision on expediency of further prototyping and scaling is made. But it is only a part of work.
Colleagues actively work with the innovation community and startups which for bank are potential points of growth as give the chance to find interesting almost ready technologies and to quickly build in them customer services or internal business processes. In 2018 we started own accelerator. Within the first set 10 pilot projects with startups are started. For example, Data Fabric is a software platform for collecting, conversion, storage and data management on the basis of semantic technologies. FreshDoc — the designer of documents using artificial intelligence. Synpatic is technologies of selection and assessment of information from sounds and the speech and also analysis of intonation and others.
One more important direction – the help to our HR divisions on formation of the technology agenda in interaction with universities, students and young specialists.
What your progress and plans concerning development of IT infrastructure? At the expense of what you are going to reduce its cost?
Sergey Baranov: Development of IT infrastructure – strategically important subject. So, within DevSecOps due to automation of process of providing necessary infrastructure capacities T2M indicator will be reduced. We completed the project of creation, sign for VTB, of "a private cloud". In only two years – the term, rather small for such scales, – we not only created a single platform for flexible management by IT infrastructure, but also provided migration in a cloud of 250 key IT systems. Thanks to permanent studying of the infrastructure solutions existing in the market and requirements analysis of our customers within the project it turned out to save about 1 billion rubles. Also we created the transparent system of allocation of infrastructure costs that significantly affects efficiency of activity of our business customers.
We will provide cost reduction on IT infrastructure due to complex approach. It considers permanent monitoring of utilization of the existing capacities and optimization of their use. Here management of the equipment of lifecycle (End-of-Life), development of own private cloud and creation of hybrid clouds when we use external infrastructure resources belongs (but not for information which is in the industrial environment).
We developed and at the beginning of summer of 2019 we are going to start the affiliate program Laboratory within which we will test and investigate the equipment and the system software. One of the purposes – approbation of infrastructure solutions which will be able to provide technological leadership of VTB due to implementation of modern technologies and will accelerate accomplishment of the actions plan on import substitution. Work will be conducted at the same time in several directions – servers, storage systems, the systems of virtualization, network equipment and services of a video conferencing.
What approach is closer to you – outsourcing or insourcing? For what tasks does outsourcing seem to you unacceptable?
Sergey Baranov: Earlier the VTB bank adhered to the concept of use of mainly external resources. However in the conditions of rapid business development and growth of load of our IT systems, our requirements changed. The bank made the decision to invest development in in-house. It allows to manage better the speed of hiring of IT specialists, formation and development of necessary IT competences and, thus, to guarantee quality of the provided IT solutions and acceleration of "time-to-market". But we do not refuse outsourcing. We define three IT models for acceleration of technology changes: solutions on already existing architecture, solutions on new architecture and solutions out of a bank circuit. The last mean development of IT systems the cross-functional teams created from external resources.
In the next years VTB is going to increase the staff of IT specialists to 5000 people. Due to what advantages can you compete for the personnel in information technology field with the largest IT companies and Sberbank?
Sergey Baranov: In 2018 we made the decision to increase the number of staff of department of IT and to enhance own IT competences. For 2018 we employed about one thousand IT specialists. Similar growth rates will remain also in 2019. Our key task – to support implementation of business challenges, to create infrastructure and technological capabilities thanks to which customer services will be improved will raise efficiency and additional competitive advantages will appear.
When hiring IT specialists the main emphasis is put on selection of developers, analysts and testers. Besides, we involve project managers, architects, administrators, maintenance and other profile directions specialists. During 2019 we expect to employ about one and a half thousand employees in the field of information technologies, and by the end of 2020 the number of the IT specialists to 5 thousand intend to increase.
Before us the task to turn bank into the IT company is not necessary. We create technological solutions which very often are recognized as the best in the market for our clients. I will give only two examples which were mentioned by awards for 2018. "VTB my Investments" - was recognized by the best mobile platform in the market. More than 50 thousand active users who made 1 million transactions with turnover over 700 billion rubles use it for May, 2019. The second example – the award "Project of Year" according to Global CIO for a knowledge management system "Business Wikipedia" of VTB. It is implemented in retail departments and contact centers of bank. With its help 32 thousand our employees at the same time can find information, necessary for customer service. Data retrieval takes no more than 3 seconds.
At us there is a lot of similar examples of successful and significant projects. Therefore to us IT specialists who are ready to get unique experience come, to raise and develop professionally together with bank. Rates of hiring demonstrate that tasks which we offer are interesting to much. In it our IT command was really lucky – we are faced by very ambitious goals.
What main strategic directions of development in the field of IT do you assume to put in the following strategy?
Sergey Baranov: Information technologies should become the driver of technology development of bank. Within new strategy our main task – to provide creation of an operational technology platform which will allow our business divisions to achieve effective objectives and will provide technological leadership of solutions of VTB in the market. For this purpose we defined for ourselves four key directions of development. The first – creation of loosely coupled microservice IT architecture. The second – use of a different approach to the IT organization and implementation of front lines, including flexible development tools. The third – consolidation of our infrastructure and active application of cloud computing. And the fourth – reliability assurance, availability and security of our IT systems and services.
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