When you pay $US6 billion (£3.9 billion) by accident, it’s time to admit your technology and operational controls aren’t up to scratch.
Such is the case with Deutsche Bank, which mistakenly paid the money to a hedge fund client in a so-called “fat finger” trade in June when junior staff put in too many zeros on a transaction, according to a report in the Financial Times.
The bank’s new CEO, John Cryan, might have given a knowing nod towards the screw up in a memo to staff in July (emphasis ours):
“Our cost base is swollen by poor and ineffective processes, antiquated and inadequate technology, too many tasks being completed using manual labour and, too frequently, unsuccessful investments in our infrastructure.”
These were not empty words from Cryan. In his revamp of the bank, announced on Sunday, Cryan shook up the area of Deutsche Bank that’s responsible for making sure these mistakes don’t happen. He promoted Kim Hammonds, a technology specialist.
Here’s the statement:
Kim Hammonds, currently Global Chief Information Officer and Co-Head of Group Technology & Operations at Deutsche Bank and formerly Chief Information Officer of Boeing, will become Chief Operating Officer. She will oversee the re-engineering of the Bank’s information technology systems and operations. To acquire the relevant experience in credit assessment in accordance with the German Banking Act, Hammonds will start her role as General Manager at the beginning of next year. She is expected to join the Management Board in no later than one year.
This is an important move. Analysts from JP Morgan said in a note that “the appointment of Kim Hammonds as new COO is a key appointment in the restructuring case of DB.”
A bank’s operational risk department is supposed to catch problems such as rogue traders and mistaken transactions before they become a problem.
By putting a Hammonds in charge, Cryan will be hoping the bank has the right technology for this in future.