STT State Street Corporation

By Sara Castellanos 

State Street Corp.'s chief information officer is shaking up how the 227-year-old bank tests new ideas, an effort that has brought new services such as a chatbot for investors and a blockchain-based auditing system.

Antoine Shagoury, who joined State Street in 2015, spearheaded a crash course for the bank's employees in design thinking, a decade-old methodology that Silicon Valley firms and others use to improve products or solve problems. He introduced a method of getting an idea through vetting and eventually to deployment while keeping business value in mind. He also placed more emphasis on understanding specific business problems and building technology solutions for them.

"We had to get people out of their day jobs and into a room in which they could talk about what they've always wanted to do but never thought they could," said Mr. Shagoury, who previously was chief operating officer and CIO of London Stock Exchange Group PLC. "Then, we had people who knew how to listen."

Boston-based State Street is a custodian bank that offers investment services and asset management but not other services like mortgages. Since Mr. Shagoury joined, it has launched a number of early-stage products and services, such as an AI-based chatbot that can answer basic investor and employee questions, software robots that automate mundane tasks for employees and a blockchain-based authentication and auditing system.

Mr. Shagoury's efforts come as the asset-management industry struggles with clients committing less new money to investment funds. State Street said in January that it would cut 1,500 employees, less than 4% of its staff, as it automates parts of its operations, marking a more aggressive phase in its yearslong plan to cut expenses and keep pace with industry changes.

"Change is constant," Mr. Shagoury said. "We're definitely in a part of the financial-services market that's under the most pressure to adapt, change and [technologically] transform."

As incumbents across industries increasingly see technology as a driver of future business performance, many face challenges getting emerging technologies out of the experimental phase and deployed throughout the organization. The lack of a formal process of getting an idea out of a small team and into production could be one reason that average enterprise investment in emerging technology has remained relatively stagnant over the past decade.

The urgency to innovate is part of what's motivating CIOs to take on culture change at their companies, said Graham Waller, vice president and distinguished analyst at Gartner Inc.'s digital business leadership research team. But innovating quickly is hard for companies whose employees have been conditioned to expect incremental change, he said. "The industrial-era mindset is around being steady, predictable, let's not fail, let's be absolutely certain of the outcome before we start," he said.

In order to innovate with emerging technologies, State Street had to upend existing processes and ways of thinking, Mr. Shagoury said. He encouraged his team to embrace concepts of entrepreneurship to "breathe innovation back" into the 40,000-person company, he said.

The CIO oversaw the hiring of several hundred technologists specializing in areas of data and analytics, cloud computing and blockchain. He formed a client-experience team of more than 200 employees, responsible in part for understanding, in detail, the needs of State Street's top clients.

Getting an idea from inception to deployment began with design thinking, which focuses on teams collaborating across disciplines and the idea of "restless reinvention," Mr. Shagoury said. Every new product or service is built as a prototype. Teams have to listen, learn and course-correct as needed, all while keeping the customer experience front and center, he said.

Over 18 months beginning in January 2017, 1,000 employees -- including those from information technology, marketing and other parts of the business -- were trained in the method. "It teaches people to listen differently and how to be innovative," Mr. Shagoury said. "No one says 'No.' It's almost like a support group."

Design-thinking sessions taught employees how to focus on the entire client experience, which sometimes gets lost in product development.

The product ideas now go through a vetting phase where a product team of about 200 people is responsible for assessing whether they meet the needs of the business and add financial value.

Products created as a result of this culture change include artificial-intelligence-based systems that can read legal documents and warn the company when state regulation changes may affect services.

"We learned how to be open internally to a new product idea," Mr. Shagoury said.

Write to Sara Castellanos at sara.castellanos@wsj.com

(END) Dow Jones Newswires

March 28, 2019 16:42 ET (20:42 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.