John T. Marcante, CIO & MD, Vanguard
Technology has to scale globally in a complex, highly regulated environment—it has to both be efficiently standardized as well as meet locally distinct requirements for security, privacy, and regulations. Enterprise technology providers have to deliver global solutions that can both take advantage of the scalability of technologies like cloud and big data, while satisfying regulations and maintaining security in the face of escalating cyber threats. The nice thing about this challenge is that technology advances have now made it possible to achieve this end state, and progressive companies are taking advantage of technologies like cloud and big data to deliver common capabilities and common business processes in a way which allows for flexibility by region or country.
Understanding and Addressing People and Processes
When laying the technical foundation for big data at Vanguard, it was important for us to integrate new products into our existing data and analytics ecosystem, in a way that optimized our existing investments while also taking advantage of new features. We also had to consider not only the data we already had organized in databases—but the potential sources of unstructured data, both internal and external, that we could tap. As an example, in our service centers we are beginning to use speech analytics and web and mobile data to gain insights to improve the customer experience. This gives us the ability to integrate insights from both human interactions and digital. Other external sources like news feeds, economics reports, and social media are beginning to yield benefits from customer service to investment management.
“The ability to manage and manipulate massive amounts of data is becoming critical to win in any industry”
We have also learned that understanding and addressing the people and process components is just as important addressing the technology components. As we progress, we’ve made sure to establish governance forums to connect the various big data efforts across the company. We have several levels of groups that collaborate—from leadership down to the working teams—to share ideas, best practices, and education.
Underlying all these efforts is our data governance program; this program builds the foundation for effective use of data, big or small. It’s critical to identify business stewards who are accountable for the data, and give them the tools to effectively manage it.
Developing advanced analytics capabilities for the organization is also important. We currently have pockets of deep analytical skills scattered throughout business groups, but we have also discovered skill-set mismatches, both in the business and IT, as we move to a more advanced and integrated model for using data to inform decisions. We believe our success will depend on our ability to organize a federated model in our businesses—a strong center of data science expertise aligned with localized experts in each of our business lines. Years ago we created a centralized Client Insight group to serve as a hub for analytics and business intelligence in the marketing realm—we plan to build on that model going forward.
Finally, when developing a 360-degree view, it’s important that business lines collaborate to develop that view and take all forms of relationship with a customer into account. An example for Vanguard is with our 401(k) participants who arealso be retail-direct investors—Today our Institutional/401(k) business and retail business collaborate effectively to create a holistic user experience and services that are tailored to meet the individual’s needs. Our IT organization plays a key role in helping our business clients coordinate in areas where their technology needs overlap.
Automating Investment Advice and Portfolios
The ability to manage and manipulate massive amounts of data is becoming critical to win in any industry. At Vanguard, we’ve used analytics for everything from enhancing our client experience with rich data visualizations to enhancing our investment management capabilities. Technologies like cloud and unified communications provide the ability to scale efficiently around the globe. Years ago, we started overseas offices that had their own systems because it was too complex and inefficient to design a global system. Today, technology allows us to pass our trades globally in a “follow the sun” model. Particularly in financial services, true automation of knowledge work is an important trend manifesting itself in the form of “robo-advice.” At Vanguard, we have figured out a way to incorporate the trend of automating investment advice and portfolios, by combining it with true personalization (individual goal-based portfolios that are automatically rebalanced) and access to an actual human advisor that can provide counseling during those complex investment decisions. We’ve effectively combined a rich digital experience with the added peace of mind that comes with human interaction.
Fostering an Entrepreneurial Spirit
Cloud has certainly lowered the barriers of entry in our industry—you no longer have to own your own data center to be in our business. “Cloud-native” companies can pay as they scale, without the burden of having to migrate technology, giving them an advantage over the established players who haven’t adopted these technologies. Artificial intelligence will also impact our industry—in addition to the automation of advice, it has the potential to revolutionize customer service, portfolio management, and client relationship management. In order to adopt these technologies quickly, an organization must adopt an enterprise-wide lean approach to solving problems, effectively empowering teams to test, fail fast, learn, and pivot. These forces are yielding a different business environment that has important implications to leaders today. Every leader now needs to understand technology, in addition to having the requisite business acumen. Understanding technology’s potential for our businesses creates fertile ground for innovation. Additionally, when leaders combine those two competencies with an ability to foster an entrepreneurial spirit, a nimble, “fail fast” approach—we have the right combination of skills to win in today’s business landscape.
Keeping Up with the Latest Trends
Mobile and social have been leveraged by technology giants like Apple, Facebook, Amazon, and Google to completely redefine consumer expectations. When we design our digital experiences, we have to compare ourselves to them, not just to companies in the financial industry. This certainly applies to our retail-direct business, but it also applies to our business-to-business model. Our newly launched web application for administrators of 401(k) plans—My Plan Manager—provides state-of-the-art data visualizations that allow them to slice and dice their plan data. The technology components of our offer are increasingly important to plan sponsors. Clients expect not only access to the right capabilities and data, but that it be packaged within a rich digital experience.