Credit Suisse shows you'll need to be a great technologist to get into a bank in future
You probably won't remember this - unless you happen to be the sort of geek who recalls banking presentations, but last year's Credit Suisse investor day included an interesting chart.
The chart, embedded below, was not replicated in today's 2018 investor day presentations, but it helps explain one of today's more curious revelations: Credit Suisse's spending on technology is falling.
In 2015, Credit Suisse says it spent CHF3bn on technology spending. This year, it predicts that will fall to CHF2.8bn. All of the CHF200m cut has come from so-called "run the bank" spending, which is down from CHF1.6bn to CHF1.4bn. The more innovative "change the bank" spending is steady at CHF1.4bn.
Does is matter that Credit Suisse's technology spending is falling? Well, maybe. Deutsche Bank is also cutting its technology spending and its historic under-spending on IT has been blamed for its current predicament. While European banks are scrimping and saving on tech, J.P. Morgan and Goldman Sachs hiked spending on communications and technology by 13% and 14% this year. Surely the Europeans need to spend to keep up?
Well yes, except that as Credit Suisse's chart from last year shows, spending money on some tech staff is a waste of time. - There are (or were) far too low performing teams with low code quality, or diligent coders who don't produce much code at Credit Suisse. Only the coders in the top right of the chart are really worthwhile.
Credit Suisse has figured this out. Hence today's presentation on the bank's 2018 technology investments talks of the automation of the, "development process end-to-end," and says that the banks' coders are spending an average of 5.5% more time coding each day as a result. Credit Suisse is spending less on technology and is making its existing coders more productive.
This matters because it's not just Credit Suisse. J.P. Morgan is using 'automated code scanning' which is enabling it to save hundreds of thousands of developer hours.
In this sense, banks' high IT spending is a double-edged sword. The more banks' spend, the more they will look to save. - Just ask compliance staff, who were all the rage until recently (Credit Suisse said today that its compliance headcount is up 43% in three years), but who are now being pruned back as banks seek to replace them with machine learning programmes that can monitor staff on an ongoing basis at a fraction of the cost.
A small proportion of great Credit Suisse coders do most of the work (from Investor Day 2017)
Source: Credit Suisse, 2017
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