Jahangiri: You were appointed to the role of CIO at Bank of New Zealand (BNZ) in March 2010. What are your key IT initiatives planned for the year ahead?


Yarrington: The BNZ is undergoing a major organisational change and business transformation program. This involves a number of major programs of work which will transform the way BNZ connects to its customers. This also includes a huge amount of systems development and redevelopment, and also a substantive amount of back-end infrastructural work to support it. We are implementing a new Agile methodology to support us in the way we work as a team. Almost every part of technology in BNZ is undergoing some form of significant transformational change in the coming year. 


Jahangiri: BNZ recently announced that server virtualisation, SOA and cloud computing will feature prominently on the IT agenda within the next 12 to 18 months.  What are the key deliverables of each of these initiatives? 


Yarrington: Many of the deliverables of these trends are complimentary and overlapping. The BNZ has been able to make substantive steps ahead with virtualisation.  I think that BNZ is well ahead of many other organisations with respect to virtualisation as we are achieving virtualisation levels of up to 70 per cent. This means for every 10 new servers we deploy, a minimum of seven will be virtual. For us the benefits of achieving this level of maturity with virtualisation technology are about customer service and time-to-market of products. 


Now that BNZ is at this high level of maturity, we have hit a point on the curve where we’re also seeing significant cost reductions because of virtualisation. The time it takes to manage servers is being reduced.  Our carbon footprint across our data centres is stabilising. We’re driving the machines harder, but significantly lowering our carbon footprint in this virtualised environment.  Virtualisation also gives us the ability to innovate and respond to customers quicker than if a physical server was involved.  If there is a system that doesn’t work you can simply collapse that server image and get rid of it. When you can do that quickly and cheaply, it allows people to quickly get line of sight to the business benefits.  The other day we were talking about a potential new application, we had a quick look to see if we could run it on our host and connect it back to the data sources, which were also provided by another virtual server. We were able to this very quickly.


To me SOA is a means to an end. We’ve done a lot of work in implementing middleware components and standards in the organisation. What that means is we can launch applications much faster and integrate them quickly into our mainframe backend systems. SOA at BNZ is at a fairly high level of maturity so it’s beginning to provide a return on investment.  We have instances where we have been able to take on applications that ended up as customer-facing solutions that can take weeks and months to deliver rather than years in previous times. 


Cloud computing is more of a challenge for us. There are multiple definitions of cloud computing. When I think of cloud computing I think of Software-as-a-Service (SaaS), and I think of buying services minute-to-minute out of the cloud. We are doing some of that, but I’d say like everybody else, particularly the banks, we’re waiting to see where the models are going and where the security standards and market acceptance is headed.


Jahangiri: BNZ plans to launch interactive branches that feature videoconferencing facilities, touch screen technology and free wireless internet. At what stage is this roll-out at; and how will success be measured?


Yarrington: We are already opening examples of our new store design.  Success for this program is about creating a fantastic customer experience every time you walk into a store.  The BNZ has tried to look differently at the banking store experience and move away from traditional banking models.  We want to change the old model that is about: “I have to go down to the bank, stand in a queue, wait for teller, grab a withdrawal form that has been scribbled all over and stand in a line of people staring out thinking about their next summer holiday” experience and instead turn that into something way more engaging and hopefully far less time consuming. 


What we have done is change the way people physically interact with the stores, so the traditional queuing approach and how you access and interact with tellers and other store staff will be different. We hope that staff and customers are able to move around in the store. We have also tried to implement signage that is both informative and engaging. It creates content that is relevant to the local community and is dynamic. We are deploying digital signage which can change frequently.  If you are engaged with us for a length of time you’re not staring at the same sign with numbers or figures on the wall. We’ve tried to change the way the humans interact with the technology. This technology is hopefully becoming less intrusive and more engaging to the customer experience.


This includes the ability to move screens around and use touch screens that allow customers to interact with data. This program – which has been underway for some time – is a fantastic opportunity for the BNZ.


Jahangiri: What are your views on industry projections citing biometric authentication, virtualisation, and contactless payments as the key technology trends to watch out for?


Yarrington: These are trends that we are watching and in some cases actively deploying. We have already discussed virtualisation, which now can be classified as an enduring industry trend for a number of reasons. Desktop virtualisation gives customers and staff the ability to access technology and they don’t require a significant amount of maintenance. We are undertaking desktop virtualisation pilots that enable users to access a virtual desktop thousands of miles away from their physical computer.  It can be a fantastic experience because like any appliance, if they have any problems with it they just turned it off and back on and there it was. I think that we’ll see far more of desktop virtualisation than we’ve seen before. I think it makes for a better customer experience.


We are certainly looking at biometrics and how that will improve the customer experience.  We have to make sure that we provide information to the person who owns the data, and only that person can be allowed to access the data and the ability to perform transactions.  I think that some of the recent voice biometrics programs run in New Zealand and Australia are challenged with getting ‘it right’ on a very large scale. I think we are still a little way away from software in the biometrics space to be up to doing the really large-scale, highly-intensive financial services transactions. The government agencies have done this really well with their massive numbers of clients and their need to identify people quickly and reliably. They are doing a great job pushing biometric technology forward. 


Regarding contactless payments, New Zealanders seem to be very heavy users of EFTPOS and their expectations around this technology are very high.  I think that contactless payments plays into a cultural niche in New Zealand and I think the technology that delivers it is now readily available. It is one of those fantastic opportunities where the Kiwi culture could adopt this technology really quickly. The contactless payments technology enables people to do small payments without going through an extensive PIN, sign or identification process. You can pay for a newspaper or coffee really quickly. The underlying theme of all of these technologies is to make sure customer privacy and identity is managed because safety is not negotiable and, in fact, safety underlies this entire platform.  One of the concerns with contactless technology is what happens if you lose the card or the device that you are using, because in some cases the device can be a mobile phone. The ability to quickly say I’ve lost my card, device or token and to have it replaced efficiently is critical in New Zealand or in any other country.  


Jahangiri: To what extent is BNZ’s IT mandate influenced by parent company, National Australia Bank’s, next-generation core banking initiative?


Yarrington:  I think BNZ is in the best possible position. We have a parent, NAB, which has announced they intend to invest very significant amounts creating a new core banking platform.  BNZ is not forced to take that platform, and indeed will have the opportunity to consider the extent to which we want to be part of NAB’s roll-out of the technology.  To what degree is this influencing us? Well to a degree, it has given us the opportunity to see projects that are emerging from the inside. We are engaged with the Nab and are watching how the products are evolving.  The question is, how do you design a whole new way of thinking about commercial and retail banking; and how do you turn that into new software and keep that software upgraded without spending too much on upgrade costs while also delivering the software in multiple languages, across countries around the world.  I think part of the answer is the modular design and development approach that Nab has adopted.  At BNZ we have line of sight into the whole program, so are well positioned to deliver realm value to the local market.


Jahangiri: What do you think is the most pervasive IT trend taking place within New Zealand’s retail banking sector right now?


Yarrington: This is a good question. I think the level of virtualisation is the most consistent trend.  Not having been in New Zealand for a huge amount of time, the one thing I do notice is that New Zealand seems to have adopted the virtualisation technology and capability faster and in a more significant way than any other country in the world. Kiwis understand the benefits of time-to-market, carbon footprint, cost reduction and the customer service benefits. 


Jahangiri: How do you foresee the retail banking customer channel evolving in the next three to five years; and which technologies will drive change going forward?


Yarrington: I think we will see much more integration of all channels within retail banking. When you think about an ATM it is a screen with a keyboard; a telephone and PC are also screens with keyboards and obviously a work station within a BNZ store is a screen with a keyboard. So when you pick up your phone and ring in, you’re talking to someone who is sitting in front of a screen with a keyboard. I am expecting to see far more consistency across these channels than there has been in the past. For instance, if you go up to an ATM, then go into a store, the store will know that you’ve just been at the ATM; and if you’ve experienced a problem at the ATM they will know about it before you walk through the door and they will be ready to deal with it. Similarly, they will know you have just been phone banking or online banking. The consistency and service to get across these channels will be higher. I think the change that we will see in the channel space is that these integrated channel technologies will merge.  The focus will be on providing a higher quality, more consistent and more predictable and integrated service to customers.


Jahangiri: As CIO, what skill set are you seeking in potential IT candidates?


Yarrington: We think about three things when talking to folks about whether they are going to work with us.  The first thing is the customer. If potential candidates come into a conversation talking about the customer and are focused on the customer, and how to best work for the customer then we’re off to a fantastic start, because ultimately there are really good technical people all around the world. However, technical people who can deliver customer-focused outcomes are the people who make differences.


The next skill is curiosity.  Curious people are often very difficult to find. These are people who are truly curious about their world, technology, customers and what customers think. You tend to hear that come through in conversations and see if these people want to run things by the customer to get their input.  


Lastly, it’s enthusiasm.  This is a natural extension of the other two factors. Enthusiastic people are generally customer centric and are naturally curious people.  They want to understand people and technology and make it work. They are continuously enthusiastic about combining all of that. Experience is also good, and certainly it’s better than no experience. But I think if you’ve got a healthy dose of customer focus, curiosity and enthusiasm it makes up for a lot of experience.


Jahangiri: What keeps you motivated about your job – is it the technology or the sector and why?


Yarrington: For me it’s the people that keep me motivated. It’s the people that get me up out of bed every morning.  This is because customers are people, they buy things or they don’t.  If they don’t buy things then businesses don’t survive.  Thinking about the customers as people and thinking about what is going to delight them, encourage them to buy services from us and continue to buy services from us over time is what I think about every day. 


Technology is only part of this challenge. It is the people that built the software, run the technology and maintain it, answer the calls on the help desk, and get up in the middle of the night to bring back servers when they are down. At the end of the day all of that hardware and software doesn’t matter that much, it’s the people that make, deliver and use it that really matter.


Jahangiri: Every IT leader, particularly at your level, has a legacy they wish to be remembered for. What is yours?


Yarrington: I’m not sure everyone has a legacy they want to be remembered for because I feel way too young to be talking about legacies. I do get that people think ahead, but one of the propositions I have discussed with my team is the idea that we are only temporary custodians of our roles. There were people sitting here before we got here and there will be people in these roles years after we leave.  We are only minding the chair for a while for someone else. In the time that we are custodians of these roles and teams, the best legacy is that you left it better than when you arrived. Better means that the people are more highly equipped, the technology is more stable and costs are better known and managed. Most of all that the customer experience with technology is better. The more you focus on what you’re going to leave behind, the more you might not be spend your energy thinking about what you’re doing right now.