André Lagger, CEO LGT Financial Services, talks about the task and special way of working in IT in a medium-sized bank like LGT and why many companies reverse their IT outsourcing.

André Lagger, the COVID-19 outbreak must have been a milestone for LGT’s IT: they had their hands completely full and were responsible for ensuring that the infrastructure kept running.

It wasn’t so much of a milestone as a challenge. We had to swiftly equip the majority of employees with remote workstations by procuring the necessary hardware, which was time-consuming. But we also reacted flexibly and quickly to new issues, for example with the introduction of MS Teams. The only way all of that can be achieved so quickly is if you have the necessary IT expertise in-house.

But the transformation that is underway in IT had already become apparent before the pandemic – can you tell us more about this?

IT has always supported LGT Group’s business activities. But its importance has increased significantly in recent years and the pandemic has further highlighted that importance. IT is now more of a key component of value creation than ever. It is a competitive factor, because banking is IT, and IT is fundamental for future viability.

«Banking is IT»

But IT is useless if the business is not involved, which it now is, by contributing with a clear strategic focus. Together, we are driving the digital transformation.

What can you tell us about the interplay between IT and the business?

It is because of developments such as digitalization, data analytics, agility, speed, expanding business and geographic coverage, competitors, etc., that IT must be able to respond faster and more flexibly to client needs. And that’s only possible if we work closely with the business.

After all, we can’t just launch into our work without knowing what clients’ needs are. We have steadily improved the interplay between business and IT, in other words, we are closely involving users and incorporating the customer’s perspective early on.

How is this changing LGT and its IT in particular?

We now have a longer-term focus on our core products such as Avaloq or our online banking. The business has organized itself accordingly, and prioritizes and specifies its needs for IT. We are less driven by the short term than we used to be. Today, we have a jointly agreed on and regularly reviewed longer-term roadmap for addressing future challenges.

«We continuously improve existing products»

IT can also still improve ownership for products and solutions. In principle, an IT service is provided in the same way a product is. Creating a product is complicated and involves a combination of people, processes and technologies that span various disciplines within IT. In the end, there needs to be one person with responsibility across all of these aspects.

New methods used for projects, such as agility, bring additional changes to the interplay within IT and with users. In these situations, our focus is on achieving the greatest possible client benefit. Together, we develop a high-quality product through an iterative process with the help of regular feedback provided during the implementation of the solution.

Planning ahead probably means more than just launching a product and then moving on to the next project, correct?

Projects and the resulting products are almost never finished, even when the product becomes part of day-to-day operations. We continuously improve products to ensure they cater to evolving needs.

«Our IT architects provide the plan for the building site»

But before they become part of day-to-day operations, products are first rolled out, which is an expensive and time-consuming process. Avaloq is a great example. Although this major project was completed slightly over ten years ago, we now have quarterly release windows that include countless changes. It’s almost like a living organism.

New products, new needs, new technologies – how do you ensure you stay on top of all of these important factors?

That’s something the entire IT management is responsible for. It includes monitoring the market, having a strong network in terms of peers, technology partners and competitors, and fostering those networks. Our IT architects play an important role in this too. Together with various stakeholders, they assess technologies, trends and methods. They are like urban planners, and identify how to best use applications and where synergies exist.

«The boundaries within the organization need to fade into the background»

After all, not every new requirement means that a new product has to be created. Sometimes we can use or adapt something that already exists. In other words, our IT architects provide the plan for the building site and set targets. However, a certain degree of heterogeneity always exists, which is why the IT architects design a road network that ensures we don’t get lost in the technology jungle.

What challenges does LGT’s IT face in addition to complexity?

If we want to leverage the potential of digitalization, we need to work even more collaboratively and cross-functionally with all stakeholders. Personal exchanges, communication, a common understanding and close collaboration are therefore extremely important. The boundaries within the organization need to fade into the background. Information technology is becoming the centralized hub of disruptive change and does not recognize those boundaries. But it can only generate added value if the client and user perspectives are incorporated.

That sounds like a bigger IT department would be needed at LGT, but aren’t many competitors increasingly outsourcing their IT?

That’s no longer the case. Many companies are bringing IT back into their organization. If you want to actively shape a company’s digital future, you have to own large parts of your IT and have or build the necessary expertise in-house.

«Many employees actively shape and participate in these change processes»

That doesn’t mean we do everything ourselves; for example, the cloud can be an alternative for services with little need for differentiation or for operating standard solutions. But even with cloud services, we need internal experts in order to use these applications.

What role do employees play in this?

Everyone at our company is regularly confronted with changes in their area of responsibility. This is a sign that we are all affected by the change. Many employees actively shape and participate in these change processes. We have to continue to take our employees along on this journey and to ensure that the right conditions are in place.

We have to see change as an opportunity rather than a threat, invest continuously in training and development, believe in the talent of our employees, empower them to tackle new issues and bring in specific expertise to ensure we learn. We want to remain an attractive employer for talented individuals and to continue to inspire our employees with exciting responsibilities.

André Lagger has been CEO of LGT Financial Services since 2001, and CEO of the Operations & Technology business unit since 2006. He has a doctorate in Business and Economics from the University of Bern in Switzerland.