Money Goes Digital

From its earliest days, the modern banking system has been built on the assumption that people want both money in their pocket and a chequebook in their hand. Billions of dollars have been invested to help banks address those two fundamental desires. But now, under a phenomenon Robert H Spicer II, executive vice president and CIO for Chevy Chase Bank, calls "the digitization of money", all that is changing — quickly — and banks around the world are scrambling to keep up with a new reality

For instance, as ever-growing numbers of people turn to bank debit cards as an alternative to cash, Spicer fears the vast army of automatic teller machines (ATMs) across the globe is losing its primary mission, and banks will struggle to find ways to maximize their investments in ATM technology. Then there is the whole question of the rising overhead imposed by new ways of dealing with cheques. After the September 11, 2001 terrorist attacks in the US, the banking industry and US government alike began to realize how risky moving cheques by plane could be. Now banks must comply with new regulations requiring them to digitize all paper cheques and archive them for seven years. The resulting spike in processed data is threatening a storage and accessibility crisis.

Hanging over both of these like a spectre of doom is the ever-rising challenge of securing all that financial information, with banks forced to counter fraud, provide both safeguards against terrorism and reliable, foolproof methods of authentication, protect customer privacy and ensure the security of customers' financial data, all the while complying with increasingly complex government regulations.

"It's all about risk and the whole area of risk management, and that could be fraud, that could be compliance, that could be money laundering, that could be terrorists trying to break into the bank. Suddenly we're seeing an explosion of new banking systems to try to mitigate all that risk. And we have installed them, we are monitoring activity like we've never monitored before — large-scale, with artificial intelligence and everything else looking for unusual banking behaviour patterns. I think the future is going to be great for those people developing solutions," Spicer says.

"These are the things that are transforming the way that I look at things."

In fact Spicer believes there are few areas of endeavour where the challenges posed by continuing technological transformations are set to hit harder or deeper than the banking industry, which does, after all, work with other people's money.

Banking on Change

And challenges are clearly what Spicer thrives on: his first 20-odd years of mission-critical IT experience included working on telemetry systems for no less than seven Apollo space missions. "The reason I got out of Apollo was that I just figured once man landed on the moon, they would start cutting back on the budgets and I'd need to find another long-term career," he says. "I figured it was better to find something else to do, even though it was very exciting and I learned quite a bit.

He also spent time consulting to the Governor of Hawaii before taking up the position of IT director with Chevy Chase Bank, then quite small, more than 21 years ago. He had already spent five years as IS director for a savings and loan institution called Honolulu Federal, installing what he believes was the first ATM switch in the US and developing its telephone and other online banking systems.

"We built some financial systems for the General Accounting Office for the government and then when I finished that there was an opening for an IT director with Chevy Chase Bank. That was about 21 years ago. At that point the chairman of the bank — it was a small bank — asked me to come in and build an in-house IT capability from scratch. So I spent the next 21 years building a data centre, and hiring people and developing all the associated banking systems." Spicer has been helping the bank weather the march of technological developments ever since.

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