The video features a discussion about the adoption and impact of technology in the financial sector, with insights from two industry experts, Dominic Ree from Citizens Financial, and George Patterson from PJM Quantitative Solutions. Dominic discusses the modernization journey at Citizens Financial, highlighting the transition from an outsourced technology environment to in-house engineering talent, the adoption of agile working practices, and moving company applications to the cloud to enhance stability, speed, and service delivery.

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Key Vocabularies and Common Phrases:

1. modernization [ˌmɑːdərnɪˈzeɪʃən] - (n.) - The process of adapting something to modern needs or habits. - Synonyms: (upgrading, updating, reforming)

Don, you had said we spoke earlier that leveraging technology has been this multi year modernization.

2. stability [stəˈbɪlɪti] - (n.) - The state of being steady and not changing. - Synonyms: (security, consistency, reliability)

Number two, we were unstable and we had a lot of work to do to increase the stability of the company

3. agile [ˈædʒaɪl] - (adj.) - Able to move quickly and easily; used to describe a method of project management. - Synonyms: (nimble, swift, flexible)

The second thing is we reorganized the entire technology delivery around agile ways of working.

4. intellectual property [ˌɪntəˈlɛktʃuəl ˈprɑːpərti] - (n.) - Creations of the mind, such as inventions, literary works, designs, symbols, names and images used in commerce. - Synonyms: (trademark, copyright, patent)

So that piece of software is really our intellectual property.

5. contingency [kənˈtɪndʒənsi] - (n.) - A planned action or strategy to manage unforeseen events. - Synonyms: (backup, precaution, emergency)

So there's a lot of things that can, that you have to kind of do a little contingency planning and thinking about, okay, how does this go wrong...

6. cybersecurity [ˈsaɪbərsɪˌkjʊrəti] - (n.) - The practice of protecting systems, networks, and programs from digital attacks. - Synonyms: (information security, computer security, IT security)

So like many organizations we have a cybersecurity officer and, and you know, a relatively large investment in terms of like people on the ground.

7. seamless [ˈsiːmləs] - (adj.) - Having no awkward transitions, interruptions, or indications of fusion. - Synonyms: (smooth, flowing, uninterrupted)

You've got to migrate your clients and you need that to be as seamless and as painless as possible.

8. headwinds [ˈhɛdwɪndz] - (n.) - Challenges or obstacles that impede progress. - Synonyms: (challenges, barriers, obstacles)

There are certain headwinds, you face certain challenges.

9. interface [ˈɪntərˌfeɪs] - (v.) - To interact or communicate with another system or person. - Synonyms: (connect, link, communicate)

And eventually gen AI to actually kind of speed up what we can do from a technology stack standpoint and use it to interface with our clients.

10. accretive [əˈkriːtɪv] - (adj.) - Contributing to growth or increment while adding value. - Synonyms: (additive, cumulative, contributory)

They're working on things which are actually incredibly accretive to the customer experience.

Citizens Financial & PGIM on Tech & Investing

I'd like to welcome Dominic Ree, Citizens Financial, and also George Patterson from PJM Quantitative Solutions. First thing I want to do is set the table for everyone here and give them an idea of how you're involved in the latest technology, what you're doing. Don, we spoke earlier that leveraging technology has been this multi-year modernization, from everything from customer call centers migrating to the cloud.

Yes, just by way of background, we IPO Citizens Bank 10 years ago and before that, we were owned by a bankrupt British bank, Royal Bank of Scotland. It wasn't a go-go investment period for the eight years before the IPO. So when we inherited the company, we had an enormous amount of work to do on our technology stack. There are a couple of big themes. One is we were almost 100% outsourced with vendors and didn't have the engineering talent needed to serve our customers the correct way. Number two, we were unstable and had a lot of work to do to increase the stability of the company. We've been on a multi-year journey really, which has kind of three components to it.

First was moving from outsourced environment into an engineering environment, probably increasing from a handful of engineers managing vendors to hundreds of internal engineers building applications for us now. The second thing is we reorganized the entire technology delivery around agile ways of working, integrating technology with product and marketing specialists surrounded by customer journeys and delivery on a totally integrated basis. Instead of doing this the usual way, we invested in our technology and our customer, and so a mobile app is released every three weeks. The last piece, which we're almost finished with, is migrating all of our applications into the cloud. We aim to finish 70% by year-end 24, and 100% by year-end 25. This will allow us to deliver faster, have more stability, and adjust the ways we do business internally.

So it's a continuing journey. Now, George P. Jam on the investment side, explain what kind of technology using and the thought process behind it. So my firm is more quantitative, typically called a quantitative investment firm. We build models and the models largely determine what we're buying and selling. We don't have traditional fundamental analysts, so that piece of software is our intellectual property developed in-house. However, many support functions use external solutions as they're not part of our core value. It's difficult to get the buy versus build calculation right; building doesn't consider upgrades or changes in developer pool, but buying or licensing grants upgrades, documentation, and you can hire people who know the system. You need to think of total ownership cost, rather than only immediate solutions.

And you touched upon the build versus buy. Go deeper into how you decide when. We often choose partners, going from platform partners to specialty delivery partners. One big thing is upgrading our payments business. You've heard about embedded finance, taking a customer's receivables and payables and embedding services into them, use partners for those services as they need current updates. Every action is evaluated as building it ourselves, buying it or partnering. Another thing we've done over three years is buy a big technology investment bank in Silicon Valley. They have early-stage tech company insights, and we work together to identify unique services to partner or invest early in. Everything is centered around a client need, delivering as cheaply and quickly as possible.

Advice for starting out? It's customer, customer, customer. Traditional banks build and sell products, while we focus on what customers need. Areas like ESG or cyber management require our deep understanding of client pain points and manufacturing solutions for them. Now George, are you surprised at how much older technology is out there? Oh, it's out there, yeah. Often someone says they'll partner with us only to find they can't deliver. Acknowledging and engaging in modernization is important, but changes bring headwinds and challenges.

What challenges has Citizen Financial faced? Making sure in the planning stages and development that the entire architecture of any build is complete. Previously, you could build 3/4 of something and find out at the end it doesn’t work. So, we ensure organized teams for each build's path. Another issue is migrations; once you have a platform built, migrating clients must be seamless and painless. Large migrations need extensive hand-holding.

headwinds you've faced? Think about what a seven-year software or relationship looks like at the next step. Mergers may make a partner unsuitable or lead to price increases. When of recent technology migrations, PJM notices bringing different businesses together now. Historical silos across equity or fixed income now have shared backbones for more efficient organization-wide work. Despite historically focusing on core business like credit or equity, they see market need evolution with technology uniting them.

Advantages of Citizen Financial's tech investments? Serving clients, for example, their payroll protection program during Covid showed the flexibility enabled by an engineering stack. Another is building a large private bank now seeing personal and business accounts on one report, enabled by flexible technology investment. What excites you looking ahead? Clients increasingly ask for comprehensive services—technology investments allow flexibility to fulfill these needs.

George, how do you deal with the risks and stay on top? A cybersecurity officer and a large investment are necessary for multiple data centers as backup. Not for the faint-hearted and needing weekend manual work for upgrades when markets are closed. Future technology's promise, it's advanced now, things you hope it'll do. Both see promise in AI, robotics, and generative AI to interface faster with substantial results and digitally. Point out increasing understanding that data is valuable.

Closing, how motivate everyone on board with upgrades? After success, motivating the next challenge is easier. Shield 80% of people from technology changes, focusing on those directly impacting delivery. Teams excited by customer-focused outputs increase loyalty and deliver better experiences. George shares a learning culture where mistakes are expected, learned from, and avoided next time. This fosters a long-term view and progress. Closing marks a major applause for their insights.

Technology, Finance, Innovation, Citizens Financial, Engineering Transformation, Agile Practices, Bloomberg Live