About the organisation
The European Central Bank (ECB) is currently celebrating its 10th anniversary, having been created in 1998 to set monetary policy for the Eurozone – the world’s second-largest economic area after the
Under the treaty establishing the European Community, the ECB – as the core of the European System of Central Banks – is also obliged to provide services to the NCBs of those European Union members that are not presently in the euro. In total, the ECB’s responsibilities and services stretch across no fewer than 27 countries – and counting. These services include providing data-driven analysis and reports on market conditions and trends, monitoring the liquidity of European payment systems and integrating new members of the Eurozone into the unified monetary systems.
In order to improve the efficiency, and therefore competitiveness, of the Eurozone, the ECB has been driving greater collaboration across European member states, using a number of collaborative technologies. Heading up this initiative is Magi Clave, the ECB’s IT director. Since 2003, Clave has also been driving a major internal project to overhaul the bank’s IT management structure and more closely align the IT department with the ECB’s business functions. Clave talked to Information Age late last year about the ECB’s ‘second wave’ IT strategy, aligning IT with the business, and how banks love to complain about regulation.
Information Age (IA): The European Central Bank is unlike most other banks in terms of its remit and therefore its operations. Can you outline how this translates into its IT systems?
Magi Clave (MC): The ECB was established in 1998 and started with two milestone implementations: the first was the introduction of the euro – which began in 1999 with non-cash transactions and then, at the end of 2001, we started with all cash transactions, and the euro coins and notes were introduced into the market. We are currently still in that second stage in the overall evolution of our IT systems. We rushed to finalise many systems to make sure that we went live; and now we’re looking at our second-wave strategy.
In the first period, we were mainly focused on time to market; we wanted to make the [deadline for the introduction of the] euro and we rushed to achieve it. The systems we developed related to what we call analysis and insight, which is whatever we need in terms of systems on which to base the monetary policy decisions. We analyse a lot of data, meaning that the statistics department is one of the major clients that we have at the ECB. In terms of the statistics department, we have to aggregate and integrate data for each country in the Eurozone for analysis and therefore monetary strategy.
The kinds of systems in this part of the bank are based on business intelligence, data mining and data warehousing. We have finalised these, and we have been extremely active in this field in the last three years – and there are more systems to come.
Then we have a set of systems based on execution and monitoring, which are used to execute the monetary policy. These are linked to market operations for payments which, as we did in summer 2007, monitor the liquidity of the system in order to guarantee that payments across the Eurozone work smoothly. Those are mainly transactional systems. On top of that we have what we call inter-price report processes, which are mainly systems we use internally to monitor the institution, such as human resources needs, accounting and so on. That’s more linked to ERP, and we are implementing one of the big suites right now.
IA: Co-ordinating on policy issues with all of the European National Central Banks is also a major part of your remit. What IT systems have you implemented to address this collaborative challenge?
MC: We are working strongly with the European national banks on internal processes, which creates another IT domain – enterprise content and document management systems. That’s an area where we still have a lot to do. Using these IT systems we have started to develop a strategy that will allow us to collaborate smoothly across the systems and share information.
For these collaborative systems we are using Microsoft SharePoint and Open Text [products] for document management. The ECB is extremely content driven, and we make policies from that information. We also co-ordinate all the working groups across the system – for example the payments working group, which co-ordinates all the payment issues across all the National Central Banks. We are currently trying to put a system in place, using off-the-shelf platforms such as SharePoint in some areas, but also developing more sophisticated systems in other places. The aim is to guarantee the maturity of all the systems and give good service to the national banks, and in particular the committees that are coordinating with them. We are not at that maturity level on our collaborative IT systems yet so we are working on that and we have a strategy to push over the next two years.
The challenge for the ECB as a co-ordinator is to come up with a concept by which the ECB plus the National Central Banks can work together smoothly, thereby making the Eurosystem more competitive. At the end of the day, it’s down to costs: because of the variety of languages and legal systems we have to cope with, we are pretty costly compared to the
IA: Can you outline how the ‘second wave’ of your IT strategy is unfolding?
MC: Since the beginning of the ECB, we’ve been trying to cope with the [introduction and the growth of the] euro – since we created the first application and infrastructure for the Eurosystem. That was the first part of the S-curve, and we’re now moving into the second part of the curve – as the institution’s complexity increases. So we are restructuring the IT department, in order to get close to the business and to gain a better under-standing of what’s required for the future.
We felt that there are elements, such as governance, that are key to better alignment. So we took elements of governance and thought about how that stretches across the organisation – within IT and the business – and then came up with shared responsibility and partnership concepts. The business has core competencies and we have core competencies in IT but we have to share strategy, accountability, standards and risk. We reviewed our relationship with the business to try to come up with a new foundation and to put the competencies where they needed to be. We came up with a strong concept related to the IT portfolio management – with governance on top. So we have a business portfolio management [function] that is actually a pair of people – an IT portfolio manager and a businesses area portfolio manager, each strongly established with clear responsibilities.
That restructuring started in 2003 with sponsorship coming from the Executive Board, and they took the initiative to align those processes. Slowly we have seen how the satisfaction of our clients has increased, on average 10% per year during the past three years.
This is pretty good if you take into consideration where we came from.
IA: The Single Euro Payments Area (SEPA) is in effect from 1 January 2008. For a while it looked like the majority of the European banking community was dragging its feet. What challenges did this create for you?
MC: SEPA is co-ordinated by the ECB, but for us it doesn’t change much. We are more policy driven, so we make sure that all our systems are SEPA compliant. But the IT-related measures and impact are more in the commercial banking system and the clearing houses.
There was difficulty in agreeing on the direct debit payment instruments and agreeing on the formats, but I don’t think that’s a big IT issue. It’s more about trying to standardise processes. The big debates have not been technical but have been more about how all the current systems operate. For example, an element of SEPA is credit transfer, and to standardise and understand the real impact of that at a country level was a challenge. We realised that the format of a direct debit in
It’s true as well that SEPA has required some investment, and when you talk with commercial banks some of them didn’t really, at the beginning, see the benefits, which is understandable: the benefits are more for the final clients, the citizen. Some of the banks will benefit, but benefits are higher for small banks and customers rather than for big banks.