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by Helen Cunningham

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Transformative Dialogues

DTCC is in the midst of a multi-year “lean” business transformation program that is reshaping the company to better serve the industry.

Developed in consultation with the Board of Directors, the program reflects DTCC’s commitment to contain client costs by reevaluating processes across the entire organization. The initiative also plays a pivotal role in DTCC 3.0, the company’s drive to strengthen its risk management capabilities, by identifying opportunities to reduce operational risk while freeing up resources to fund new investments in risk mitigation.

Implemented in 2011, the business transformation program comes at a time when both DTCC and its clients are navigating a new regulatory landscape, intense competitive and profitability pressures, and changing economics in the financial sector.

“Just as many of our clients are evolving their business models to reflect the changing environment for financial services, we are transforming DTCC and rebalancing our cost structure to achieve higher levels of efficiency and risk management, while also creating capacity for growth,” said Andrew Gray, DTCC Managing Director, Core Business Management. “Our business transforfmation is equipping DTCC to respond with agility to the needs of our clients and regulators alike.”

Andrew Gray, DTCC Managing Director, Core Business Management

Leaning into it

DTCC launched its business transformation program after conducting research on industry best practices with clients and counterpart organizations.

The company selected an approach based on lean, a methodology used by many financial firms that can be applied across the entire company. The program builds on DTCC’s longstanding continuous improvement and reengineering arsenal, which includes Six Sigma, Capability Maturity Model Integration (CMMI) and Information Technology Infrastructure Library (ITIL). The lean methodology looks with fresh eyes at functions, structures and processes to understand how everything fits together across the company, according to Matthew Stauffer, DTCC Managing Director, Operations.

“For each area of the business, we start with an assessment and then conduct an end-to-end analysis in order to eliminate waste and maximize value,” he said. “The program includes an operational risk lens that identifies operational risk and areas of the business where new controls may be needed; it also helps ensure we don’t make changes that introduce new risks.”

Clients first

Lean starts with the perspective of clients.

“We have to understand clients’ needs in order to assess whether every step of a process adds value for them,” said Joseph Wroblewski, DTCC Vice President, Business Transformation Office. To obtain their views, DTCC draws information from its many channels of client interaction, including product managers, relationship managers and client surveys.

Gathering information from all these sources keeps the lean analysis on target. “We get rid of steps the clients say don’t add value; we don’t inadvertently eliminate things that are critical needs; and we enhance controls where needed,” said Wroblewski.

Although lean is client-driven in terms of initial input and end-results, the bulk of DTCC’s transformation is taking place behind the scenes – much like a systems reengineering. “In general, the projects are yielding efficiency, risk and cost benefits that are transparent to clients,” said Stauffer. “The program is making DTCC more efficient, strengthening its risk profile and creating capacity for growth without disrupting clients.”

Blueprint for action

For the first phase of the lean program, DTCC undertook an assessment of the entire organization and identified areas of focus. “We prioritized areas that would yield the biggest benefits in terms of risk and cost reduction,” said Wroblewski.

Next, the company established a schedule to conduct in-depth assessments and analyses, by business area, over the course of 2012. To date, about half of these assessments have been completed.

With the client input in hand, each assessment is a collaboration between DTCC’s Business Transformation Office and the area being reviewed, and together this team develops recommendations and an implementation plan. Some changes are put into effect immediately while others, such as staffing, process redesign and technology changes, may require longer timelines.

One example of the business reengineering in action is the recent reorganization of DTCC’s client service model to better align client-facing units with clients’ businesses, which was the direct result of a lean assessment. (See the April 2012 @DTCC for an article on this initiative.) The implementation of recommendations, which began in 2011, will continue for the next several years, with DTCC giving the Board quarterly status reports.


“In today’s environment, DTCC’s mandate to serve the industry is broader than ever,” said Gray. “We need to continually validate our standards for safety and resilience; to identify opportunities to reduce cost and risk; and to stay ahead of the curve in responding to new industry challenges. The business transformation program is an essential component of our drive to achieve these ambitious objectives.” @