Chase Decentralised System


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Moving from Centralised back office operations to a Decentralised System - is is beneficial for banks - A Chase bank case study

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Chase Decentralised System

  1. 1. Submitted By: Limbert Bontigao Satya Kopparapu Karthik Mehta Tanvi Patel Dolly Patel MIS 750 Professor Thomas Brier JPMorgan Chase Team Case Presentation
  2. 2. Agenda <ul><ul><li>Abstract - Limbert </li></ul></ul><ul><ul><li>Company Background </li></ul></ul><ul><ul><ul><li>As-Is Matrix </li></ul></ul></ul><ul><ul><li>Analysis </li></ul></ul><ul><ul><ul><li>SWOT Analysis - Satya </li></ul></ul></ul><ul><ul><ul><li>To-Be Matrix </li></ul></ul></ul><ul><ul><ul><li>Strategic Alignment Maturity Model - Dolly </li></ul></ul></ul><ul><ul><ul><li>Problems & Opportunities </li></ul></ul></ul><ul><ul><ul><li>Governance Archetype & Key Stakeholders – Tanvi </li></ul></ul></ul><ul><ul><ul><li>Major Objectives </li></ul></ul></ul><ul><ul><li>Alternatives - Karthik </li></ul></ul><ul><ul><li>Recommendation, Conclusion & Next Steps </li></ul></ul>
  3. 3. Abstract <ul><ul><li>Chase Global Markets (now part of JPMorgan Chase) has recently moved towards a Centralized IT Environment in addressing e-business opportunities. </li></ul></ul><ul><ul><li>This case study analysis weighs the benefits and disadvantages of this Centralized IT Organization Model; and provides a suitable alternative in the form of a Federated IT Organization. </li></ul></ul>
  4. 4. Company Background <ul><ul><li>JPMorganChase </li></ul></ul><ul><ul><ul><li>As-Is Matrix </li></ul></ul></ul><ul><ul><ul><li>Leading global financial services firm </li></ul></ul></ul><ul><ul><ul><li>Assets of $1.5 trillion; operations in more than 50 countries </li></ul></ul></ul><ul><ul><ul><li>A component of the Dow Jones Industrial Average </li></ul></ul></ul><ul><ul><ul><li>JPMorganChase has its corporate headquarters in New York </li></ul></ul></ul><ul><ul><ul><li>3 rd Largest Banking Institution in the U.S. (after BofA and Citi) </li></ul></ul></ul><ul><ul><li>As-Is Matrix </li></ul></ul><ul><ul><ul><li>Centralized Web Development for 6 Business Divisions </li></ul></ul></ul><ul><ul><ul><li>Centralized IT Infrastructure </li></ul></ul></ul><ul><ul><ul><li>Centralized IT Governance </li></ul></ul></ul>
  5. 5. As-Is Matrix FEDERATED IT Unresponsive No BU ownership No BU Control of Central Overhead $ Does NOT Meet Every BU Need Scale Economies Leverage Standards & Tools Control Architecture Critical Mass of Skills Centralized IT - - + + Decentralized IT
  6. 6. Analysis: SWOT <ul><ul><li>E-commerce Strategy: Chase Global Markets initiated e-Capital market, in response to it’s competitors. </li></ul></ul><ul><ul><li>Strengths: </li></ul></ul><ul><ul><ul><li>Strong Global Brand and Reputation </li></ul></ul></ul><ul><ul><ul><li>Wide-reaching Branch Network </li></ul></ul></ul><ul><ul><ul><li>Strong Finances and marketing </li></ul></ul></ul><ul><ul><ul><li>Innovative Products (e.g. Chase Freedom Card, ) </li></ul></ul></ul><ul><ul><ul><li>Strong partnership </li></ul></ul></ul><ul><ul><li>Weaknesses: </li></ul></ul><ul><ul><ul><li>Multitude of Technology Platforms because of Mergers & Acquisitions </li></ul></ul></ul><ul><ul><ul><li>Old Chase vs. Bank One Management positioning </li></ul></ul></ul><ul><ul><ul><li>Business Model </li></ul></ul></ul>
  7. 7. Analysis: SWOT Cont.. <ul><ul><li>Opportunities: </li></ul></ul><ul><ul><ul><li>Expanding role into fixed income trading (Market Axess) </li></ul></ul></ul><ul><ul><ul><li>Strengthen leadership position in Foreign Exchange Market (ChaseFX) </li></ul></ul></ul><ul><ul><ul><li>Geographic expansion into China, India </li></ul></ul></ul><ul><ul><ul><li>Efficiency initiatives (Chase Bond) </li></ul></ul></ul><ul><ul><li>Threats: </li></ul></ul><ul><ul><ul><li>Investment Banking exposure to sub-prime crisis </li></ul></ul></ul><ul><ul><ul><li>Slowing economy, less investment and M&A activity </li></ul></ul></ul><ul><ul><ul><li>Financial Service sector hurting </li></ul></ul></ul><ul><ul><ul><li>WorldCom and Enron related litigations </li></ul></ul></ul>
  8. 8. Analysis: To-Be Matrix Federated IT Reporting IT Infrastructure Unresponsive No BU ownership No BU Control of Central Overhead $ Does NOT Meet Every BU Need Scale Economies Leverage Standards & Tools Control Architecture Critical Mass of Skills Centralized IT Infrastructure - - + + Decentralized IT System Development IT Reporting Vision & Leadership Users control IT Priorities BU Ownership Responsive to BU's Needs IT System Development Excessive $ to group Variable Standards of IT Competence No Synergy & Integration Reinvention of Wheels Strategic Control Synergy
  9. 9. Analysis: Strategic Alignment Maturity Model <ul><li>The Strategic Alignment Maturity Model (SAMM) assessment was evaluated by taking into consideration of 6 categories: </li></ul><ul><ul><li>Communication - practices that encourage knowledge sharing across the business and IT organizational communities </li></ul></ul><ul><ul><li>Metrics - practices that demonstrate the business value of IT </li></ul></ul><ul><ul><li>Governance - practices that ensure that the business and IT communities formally discuss and review the priorities and allocation of IT resources </li></ul></ul><ul><ul><li>Partnership - practices that address how the business and IT communities perceive the contribution of the other, as well as the level of trust between the communities and how risks and rewards are shared </li></ul></ul><ul><ul><li>Scope & Architecture - practices that address the extent to which IT is able to provide solutions that are customizable for each customer </li></ul></ul><ul><ul><li>Skills - practices beyond traditional HR activities that enhance and reward skills that align business and IT objective </li></ul></ul>
  10. 10. Chase Global divison <ul><li>As-IS Centralised </li></ul><ul><li>Business & IT worked in small groups, in same geographies. </li></ul><ul><li>Idea generation and decision making is in main division of parent company ie in-house. </li></ul><ul><li>Financial industry generally speaking is more localised and so fewer mergers & acquisition, so lesser need for new system & up gradation. </li></ul><ul><li>Same or similar geographies implied similar way of communication, time zone, similar work culture, easier to measure work done due to similar geographies making management of projects easier and less governance issues. </li></ul><ul><li>Work force in smaller geographies implied easier measurement of work done. </li></ul><ul><li>To-Be (Distributed) </li></ul><ul><li>Business & IT work in bigger groups in remote corners of world and decision making is based on ideas generated, discussed and finalised in 10 different geographies. </li></ul><ul><li>Ideas generation is outsourced and happens in different geographies of company’s division and decision making committee sits in main division of parent company ie in-house. </li></ul><ul><li>Financial industry going global so greater number of merger and acquisitions, implying greater degree of changes and customization and up gradation of parent company’s software. </li></ul><ul><li>Globalised work force means centralised system relatively less effective when it comes to governance, metrics compilation, adhering to compliance of respective countries and need for distributed system for measuring metrics. </li></ul>
  11. 11. Distributed system
  12. 12. Strategic Alignment Maturity model (SAMM) Advantages of Distributed system in globalised era <ul><li>Communication </li></ul><ul><li>Idea generation and faster development cycles </li></ul><ul><li>Performance </li></ul><ul><li>Governance </li></ul><ul><li>Rather than the Master –Slave communication as in case of existing system (Centralised depository), alternative offers peer-to-peer communication . This implies faster resolution of small problems at initial level thus saving time and money for the company. </li></ul><ul><li>Multiple location data repository implies breaking down of departmental silos within the Chase bank and thus greater degree of feedback from Business user, IT, Management, consumer. </li></ul><ul><li>Better feedback at early stage of IT development means better idea implementation at an early stage and shortened development cycles. This in turn reduces risk of need for changes at later stage of development and better capability of change management. </li></ul><ul><li>Faster and more democratic idea generation and thereby better and more efficient decision making. </li></ul><ul><li>Better communication and democratic decision making implies best talent ideas are accepted and better performamce. </li></ul><ul><li>Data availability at multiple location implies better monitoring of work, </li></ul><ul><li>Greater degree of discussion, better idea generation and reduction in Administrative overhead cost typical of a global company. </li></ul>
  13. 13. SAMM <ul><li>Data recovery </li></ul><ul><li>& better risk </li></ul><ul><li>management of data </li></ul><ul><li>Infrastructure </li></ul><ul><li>In Centralised data repository failure of the central system implies complete failure of the entire system, if the single system fails. Multiple systems data storage in decentralised system implies replication of data across multiple systems then enables faster data recovery . </li></ul><ul><li>Loss of only smaller chunks of data since, data is available at every location provided by server thus lesser degree of risk in event of failure of a system. This is a big plus for management and thereby governance of the operations. </li></ul><ul><li>Globalised resources like human resources, global offices of Chase unlike localised offices of past requires distributed system to cater to global needs of today’s Chase office in terms of Metrics, peer-to-peer communication, compliance data with local governments. </li></ul>