An Ever-Closer Union: Credit Agricole CIB's Dulon Bets on Unity

Like many capital markets IT practitioners, Pierre Dulon came to financial technology by chance. Having spent seven years in the telecommunications industry, mainly in sales and global business development, he was brought to the historic French bank Credit Lyonnais in 1998 to oversee the externalization of its telecommunications business.

When Dulon joined Credit Lyonnais, which was founded in 1863 in France's second city of Lyon, it was in the eye of a storm struggling to stay afloat after being hit by several internal scandals and debilitating debts. To help reduce the bank's balance sheet-an ultimatum imposed by the French government bailout plan-it was decided to outsource the telecommunications unit. But poor management and additional scandals proved terminal for the then state-owned institution.

Credit Lyonnais was fully privatized in the early months of 1999, until Credit Agricole finally decided to acquire the troubled bank in 2003. Dulon moved to the "green bank" during the merger of the banks' two investment arms and was asked to oversee the international core banking system outside of France.

Several years later, he was appointed global head of IT for Credit Agricole, a promotion that had nothing to do with chance.

In his office overlooking the River Seine in the Parisian financial district of La Défense, he explains how he has always actively looked to create an ever-closer union between the bank's technologists and its clients-the business users-and how the different projects he is leading reflect his mantra.

"There is a big challenge for CACIB at the moment, which is to be more competent, so we need to have an IT team that is closer to the business needs and that fits with the demand. The IT team should not be seen simply as the provider for the daily applications, but as the partner that will help you with your daily task. This is where there is still some work to do and it requires that IT people spend more time with the users."

One Size Does Not Fit All
One recurrent theme of Dulon's projects during the course of his career is his dedication to lean management. His first year at Credit Agricole was occupied by the merger and he recalls spending most of his time selecting the systems he wanted to keep, those he wanted to jettison, and those he wanted to build.

"We needed to rebuild the international IT systems from the ground up," he explains. "We needed a new and unique platform that would cater for all of our 32 countries, and that we redeveloped entirely. That kept me busy for a few years but it was a great personal achievement to be building it from A to Z, from the first architectural draft to the final migration in the last country."

He then focused on centralizing the infrastructure to reduce the costs and improve the security and operational risk, a common concern for any technologist within the corporate and investment banking world. So until 2007-08, Dulon focused on reducing the bank's data centers by relocating assets and staff under three main geographic hubs: the US, Europe and Asia-a strategy that dramatically cut spending while improving efficiency.

Later, after he was tasked with overseeing the bank's global IT, he further consolidated its infrastructure. He relocated the IT department, and the infrastructure and project management teams, including the bank's business analysts, with the capital markets team to create one global strategy across IT.

But although Dulon spent a lot of time and effort centralizing infrastructure at Credit Agricole Corporate and Investment Bank (CACIB), he never lost sight of the idea that "one size does not fit all." He says his strategy in the long run has never been to fit everything into one box. Rather, he likes the idea of a two-tier IT system that adapts to and adopts the needs and demands of its users.

Two-Speed System
In order to implement such a mechanism, Dulon started dissecting the firm's information system by identifying which applications were delivering true value to the business through being "different" and which applications did not add value and were therefore not core to the bank.

"The applications we wanted to focus on are the ones that create value to us by being different from those of our competitors or a bit more specific, and that either give us a strategic edge or a competitive advantage," he explains. "We wanted to control those applications from start to finish by having the necessary skills internally and so making limited use of third-party providers."

In addition to the applications considered to add value, the bank was also eager to retain its compliance and risk systems in-house, primarily for security and data privacy. For those applications, Dulon explains that he put in place an agile and flexible structure supported by what he calls "commandos"-hands-on, highly skilled teams available specifically to the business users.

The commandos, an idea he brought to Waters' attention during the European Trading Architecture Summit in 2013, is the centerpiece of his larger plan to help technologist to work in close collaboration with the bank's own end-users.
In this dual set up, Dulon has identified a second subset of applications that are not necessarily core to the bank's systems and therefore provide no real differentiating value, such as accounting applications.

"Accounting, for example, is important but it isn't what really makes a difference between one bank and another. We also put our post-trade activity into this category because it is very important, but nowadays it is a commodity that all banks need to have-it is not a differentiator anymore."

Eat Your Own Dog Food
Dulon's two-tier system not only helps rid Credit Agricole of wasteful services that add no value to a product or to the business while simultaneously consuming resources and time, but it also helps the technologists get closer to the users.

"There is a big challenge for CACIB at the moment, which is to be more competent, so we need to have an IT team that is closer to the business needs and that fits with the demand. The IT team should not be seen simply as the provider for the daily applications, but as the partner that will help you with your daily task. This is where there is still some work to do and it requires that IT people spend more time with the users."

According to Dulon, when you're a technologist working in a global investment bank, the best motto to live by is that of Microsoft and "eating your own dog food." While it's not a particularly appealing thought, it ensures that developers use the software they created to truly understand the challenges and possible loopholes of the products, and possibly even try to understand the behavioral patterns that could make it easier to use.

This is an important aspect for Dulon, who thinks there is no better way than the Microsoft approach to introducing new solutions that are 100 percent targeted and fit for purpose.

"I firmly believe that one size does not fit all," he says. "You need to know how to differentiate everything, have a different approach. I really don't believe in an IT team or strategy that is monolithic."

All About Sharing Cost
All of the transformation that Dulon brought about in the backbone of the bank's infrastructure created a big cultural change within the firm as it redistributed resources differently across the organization. Indeed, to deploy his commandos where needed, Dulon had to commit more resources to the first category of applications-those that created value and acted as a differentiator-to the detriment of the second. "We also had to find the right vendors to partner with to support the second category, whether it was for offshoring or outsourcing," he says.

According to Dulon, it isn't easy to decide if and when to externalize a service, as there isn't necessarily a guaranteed market for it. "Sometimes, after long negotiations, we got vendors to do something on our behalf that they were not doing before."

Credit Agricole recently completed a utility project for post-trade derivatives processing with Jacksonville, Fla.-based FIS Global, and a shared capacity center for accounting with Accenture.

"They did it for us but with the idea to sell it to others later," Dulon explains. "That's the foundation of a utility. But it is also a benefit for us because as they grow their service, we will get access to more valuable skills and be able to reduce our spending even further."

An advocate of the utility market, Dulon sees it as one of the only alternatives to further reducing costs for large capital markets firms. "I think the corporate and investment banking sector is going through a restructure. Every CIB is looking to cut its costs and improve productivity. Margins have reduced, regulatory requirements are heavier and more costly, so there is this need to improve productivity and when you have done what you can in terms of offshoring and outsourcing, once you've touched on every aspect of your operations to do what everyone else is doing in terms of lean management etc., all you have left is sharing the cost of operations with others through utility platforms."

A Market for Utility Platform
Dulon believes that the CACIB-FIS derivatives processing utility, completed in November last year, has the potential to be spun off and run as an autonomous commercial entity, a strategy that would offer obvious commercial benefits. "I think there is room to create a market for that [utility] and it is likely that we will see more platforms springing up in a near future to cater for banks of different sizes. We are not a large CIB, so we don't have the exact same need as others," Dulon says, citing similar post-trade utilities recently launched by SunGard and Barclays, or a project between Societe Generale and Accenture as examples.

Although both are similar to the CACIB-FIS initiative, they do however only target securities processing, a sub-segment that would have been too small for CACIB to make any meaningful return on its investment. For smaller banks, a sub-segment like securities is too small and interwoven, which makes the cost of segregating it and transferring it to a separate platform too high to be economically viable. 

Building a utility platform, Dulon explains, only makes senses if you are able to focus on a large enough segment, which allows you to easily detach it from its current platform, the goal being to gather together at least two or three other players to allow the mutualization and sharing of subsequent operational and maintenance costs. According to Dulon, there are already several prospects looking to utilize the post-trade derivatives platform run by FIS, which they are looking to on-board in the near future.

The Way You See IT
The CIB segment of the capital markets is a world where technology is close to the product and is an enabler of growth. Dulon thinks this is why CTOs are better heard and understood than in other industries. For him, however, challenges arise when people tend not to speak the same language when it comes to technology.

The CIO uses technical jargon to communicate with business users, while the users themselves are more likely to use financial jargon, which technologists do not fully understand. What Dulon has realized over time is that his team needed to make a real effort to speak the same language as his firm's consumers-CACIB's business users-to better understand their needs.

In investment banking, there is an acknowledgement that technology is fundamentally bound to the product, something Dulon tries to capitalize on to enhance his department's effectiveness as a service provider. One of his best experiences on the job, he says, is his ability to provide a voice to the firm's end-users and receive feedback and input from them in terms of how to go about enhancing his department's service levels. Elevating those within his team to the rank of collaborators drastically changed the dynamic within the team, he recalls.
"We used to have a monolithic approach where we looked at everything from the same angle, so that was a big change for us."

Dulon says IT provision is similar to a military organization, where people focus on developing products and following procedures, which by nature, doesn't require much creativity and exchange with others. His method of getting his army of technologists closer to the firm's business users changed all that and simultaneously gave those consumers the opportunity to propose the kind of changes they would like to see. Because at the end of the day, he says, his business is all about people. 

Pierre Dulon Fundamental Data

Name: Pierre Dulon

Title: Head of global IT at Credit Agricole Corporate and Investment Banking.

Total Experience in Financial Technology: 17 years.

Hobbies: Sailing his Laser boat on a lake in St. Quentin en Yvelines, south of Paris. He has never tried sailing on the sea though-as it's too "unstable".

Holidays: To escape as often as possible for a trip to the Haute-Savoie in the Rhône-Alpes region of eastern France-a 30-year-old ritual.

Biggest Professional Achievement: "The project of implementing a global system was extremely satisfying because you see the result of what you've done. The other really good experience, which was a surprise for me, was to ask users for input about how we could improve the systems they use every day. We are always really surprised what we hear when we ask for ideas."