Anthony Malakian catches up with Karl Landert, the man responsible for driving Credit Suisse's One Bank transformation.
Karl Landert has risen swiftly through the ranks at Credit Suisse and now sits at the apex of a technology pyramid that oversees upwards of 1,000 IT projects at any given time. But as Anthony Malakian discovers, this CIO is anything but daunted by the size and complexity of his ongoing operational challenge. Photo by Amy Fletcher
Much of Karl Landert’s life is spent up in the air. That’s what happens when you run the technology for a global behemoth based in Zurich and not London or New York, where you could expect more client drop-ins. Landert, named global CIO of Credit Suisse in 2008, spends anywhere from 30 to 40 percent of his time traveling—that’s up to 146 days per year away from his family in Switzerland.
While it is true that jetlag may have him feeling like the walking dead throughout much of the day, it has not hampered his drive to create a truly globally efficient firm. Credit Suisse’s One Bank initiative, the embodiment of Landert’s efficiency edict, began half a decade ago, but is still driving much of the innovation at the bank.
On this December evening in New York, a few hours before he is due to board a plane to fly back to Europe, Landert lays out his blueprint for the New Year. Credit Suisse has expanded rapidly over the past decade and has no plans to stop during the next 10 years.
No matter how fast the company grows, Landert’s focus will remain on ensuring that Credit Suisse stays ruthlessly efficient.
Before Landert tells the story of where Credit Suisse is going, it is first necessary to explain where it has been. He joined the firm in 2001 and by 2004 was named head of IT. In 2006, he rose to CIO of Credit Suisse private bank and CIO of the firm’s European operations, before assuming the role of global CIO two years later.
It was in 2005, though, that the bank’s executives posed the questions: What would it mean for the IT organizations if the former Credit Suisse First Boston (CSFB) and Credit Suisse Financial Services were to be merged? How could the firm become more efficient while laying the foundation for growth? The answers were astonishing.
“We quickly found out that we could achieve run-rate savings in the magnitude of 20 percent—roughly CHF500 million ($535 million),” Landert says. “That was our initial starting point in 2005, and by 2008 we had accomplished our efficiency objectives.”
While Credit Suisse has achieved its original goals, its One Bank project—the umbrella term for its cost-cutting and streamlining drive where Credit Suisse took the decision to focus on its core strengths of private banking, investment banking and asset management, which saw the jettisoning of the CSFB moniker—is by no means an afterthought. Landert says the firm has taken the savings from the initiative and reinvested those monies into smaller One Bank projects.
“This is something that you have to be doing constantly because there is so much opportunity in all big corporations,” he says. “So, One Bank is still evolving and there are still large opportunities on the revenue side that we can tap into.”
The result is a bank that was subsequently able to survive the storm of 2008. “We reinvested the savings from the One Bank project,” Landert adds. “This also helped us to weather the crisis by being more resilient.”
The Best Is Yet to Come
The most significant recent infrastructure upgrade that has come about as the result of the One Bank initiative is at the desktop level. Credit Suisse is in the midst of replacing all its desktops and end-user computing environments to make it truly a One Bank environment. The project touches every person working at the firm around the globe, says Landert, who controls an IT budget of CHF3.5 billion ($3.75 billion) per annum.
“This is the first real project after One Bank that touches everybody in the firm that we didn’t have before,” he says. “It’s a whole new user experience on the desktop, and the desktop is only the tip of the iceberg. That is one area where we are making significant investments. We still have a couple of thousand applications that we need to migrate to work in the new environment.”
Through the initiative, each desktop will look identical regardless of location—Geneva, London, New York, Tokyo or any other Credit Suisse site. Additionally, it will allow for secure, remote access, and all the applications will be woven together through virtualization. The project also includes an overhaul of the underlying technology underpinning the desktops.
On the private banking side, Credit Suisse is consolidating all of its European onshore systems to its Swiss-based strategic platform, Landert says. “It’s a full outsourcing of technology, operations—everything—to Switzerland onto a multi-entity, multi-tenant, multi-currency system for our private banks,” he says.
When Landert joined Credit Suisse, the firm had already begun a long-term project to off-shore parts of its application development, with a big push coming over the last five years. Now, Landert says, he is looking to move certain competencies such as intranet portal development and consolidating testing to two strategic vendors, and farm out its securities settlement processes to another provider. Right now, he says, the firm off-shores more than one-third of its development and would like to move the needle up in the coming two years. The firm does not have projections yet for cost savings or staff attrition. The firm’s current global IT workforce is 17,000 strong, according to officials.
Emerging Markets Push
Internationally, Credit Suisse has entered the emerging markets of India, China, the Philippines and Malaysia and will look to continue to expand its geographical footprint in order to access more liquidity points to offer its clients. This is all based around the firm’s Advanced Execution Services (AES), which, according to Landert, has grown significantly in recent years.
In the US, the firm’s dark pool, CrossFinder ATS, accounted for 22 percent of the US dark pool volumes in November 2010, according to Credit Suisse figures. In terms of volume, the firm owns 12 percent of total combined market volumes in dark pools as of December 1, while it crossed 450 million shares per day during November last year. Additionally, Credit Suisse routes 4 billion shares per day to various venues and currently executes in the region of 700 million shares. But while Landert is pleased with the firm’s growth, it has, understandably, created capacity concerns.
“When I look at the growth and some of the challenges that we faced over the last couple of years, it always came down to capacity—do we have enough capacity to handle the order volume and execute the transactions?” he says. “I think that we have been very successful in having a model that predicted the needed capacity and always kept us ahead of the growth curve.”
The other major initiative that Landert is currently overseeing—and that is to use the term “other” loosely, as there are about 1,000 IT projects under way at Credit Suisse—is a complete overhaul of its securities division, specifically on the fixed-income side of the business.
Landert says the firm is currently developing a front-to-back risk management initiative that will hopefully allow it to deliver cross-asset, consolidated, near-real-time views of risk. This is in direct response to potential regulatory changes coming down the pike.
“That is one of the big initiatives that will keep us busy for the foreseeable future,” he says.
Ahead of the Dodd-Frank Act in the US, Credit Suisse is currently putting the finishing touches to a complete reengineering of its over-the-counter (OTC) derivatives processing infrastructure, which will help it move away from spreadsheets and will allow for front-office data sourcing and front-to-back data flows. This project will be completed in the first quarter of this year. Landert considers this latest undertaking to be one of his greatest accomplishments because it was a “whole-team accomplishment.”
As a simple result of geography and business structure, Landert’s job is a bit different from that of your typical Wall Street CIO when it comes to regulations. Credit Suisse, by virtue of its Swiss roots, faces something of a regulatory trifecta: The firm is headquartered in Switzerland, notoriously strict when it comes to data secrecy regulations; the Financial Services Authority (FSA) in the UK still holds considerable sway over it; and what is currently happening in the US on the regulatory front has ripple effects across the world.
Dealing with regulatory bodies—one, two or, as in Landert’s case, three—presents an interesting conundrum that every CIO must address: How do you prepare, from a technology perspective, for each potential change? Will the new laws and regulations add to the cost of doing business? Will margin-erosion occur? Is this temporary or a fundamental shift? Are we at the cyclical low for investing? Are investors going to come back? Is this the new normal?
All of this comes down to one overarching question: Do you try to get ahead of the regulatory curve or do you play a game of wait-and-see? Landert says it’s a little of both.
“I often argue with my colleagues that you cannot build out the technology’s flexibility enough to anticipate everything. There is always an element of tweaking the infrastructure—for example, to meet new regulatory requirements,” he says. “Our strategic agenda and the relevant technologies that successfully drive the banking business are—and will remain—complex, and there is still a lot of ‘plumbing’ that needs to be put in place on a global scale. For instance, enhancing reference data, data feeds and introducing wide-scale, front-office data sourcing. Once you have done this you can meet new requirements in a faster way, but there will always be trade-offs.”
Most importantly for Landert is that the various regulators talk to each other, and he feels this is happening. “Data confidentiality is becoming more and more of a global theme,” he says. “So rather than seeing it as a burden, we believe that we are ahead of the curve. Many other jurisdictions now have similar requirements. Regulators are now coordinating much more—the US Federal Reserve, the FSA and the Swiss regulators—are talking to each other. We value the homogenous feedback as to where we need to become better, and this helps us as a global player.”
In the Air
Landert touched down in New York on a Tuesday evening. While in Credit Suisse’s opulent Madison Avenue offices, he met with the US management team, saw a number of strategic partners, had a few one-on-one planning meetings, and sat in on steering committee and governance board meetings. That was Wednesday. He repeated that cycle on Thursday, with the added bonus of spending the evening with his 40 most senior IT staff in the region.
Landert says it’s his schedule that makes for the most fascinating part of his job. “You do a lot of things,” he says. Yet even between catching planes and trains and taxiing to and from offices and meetings, there’s simply not enough time during the week to accomplish everything.
As an example, fresh out of college, Landert joined IBM Switzerland, where he worked in sales and then systems engineering. He currently does plenty of the latter at Credit Suisse, yet longs for a little more of the former.
But that doesn’t mean he wants to become a salesman for Credit Suisse. Rather, he feels that he hasn’t put in enough face time with clients—even with all of his traveling and the jetlag. In this job, it’s easy to get lost in the technology.
KARL LANDERT FUNDAMENTAL DATA
College: Karl Landert graduated in 1984 from the Swiss Federal Institute of Technology with a degree in physics.
Lessons learned prior to joining Credit Suisse: Landert cut his teeth in the technology world through stints at IBM and pharmaceutical company Novartis Pharma. Because he both helped develop and sell new technologies for the firms, he says he has a better appreciation for looking at the business holistically: “It doesn’t matter if you are good in sales if you can’t get the product out the door, and it doesn’t help to have the perfect product if you can’t sell it,” he says.
Digging through the technology: “Sometimes I feel like an archaeologist,” says Landert of his job. “When looking at our system environments, you can read all the history and heritage of the firm, its expansion, and its mergers and acquisitions. For the old and broken parts, I have to figure out how to build a new city so that it can withstand future earthquakes and fires. Working in technology can be amazing sometimes.”
The race to zero: Credit Suisse is constantly working to cut down its latency. When we met in December, Landert said the firm was running in the range of 200 microseconds, round trip, trading with a “very low” standard deviation. “In ultra-low-latency direct market access, our offering is differentiated both by the low outright latency of 200 microseconds and the tight standard deviation on that latency over many orders, offering high-frequency trading clients a market-leading order execution capability,” he says.
What keeps him up at night: While Landert says he sleeps well, his greatest worries are the constant threat of technology outages—which have only happened two or three times throughout his entire career, he says—and the prospect of talented people leaving Credit Suisse to work for other organizations.
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