Boosting The Bottom Line At JPMorgan

Philip Fasano is a senior vice president at financial services firm JPMorgan and the global head of technology for Investor Services. In this role, he is responsible for managing the technology agenda for the Investor Services business worldwide. The technology group is a key partner in facilitating the growth of Investor Services’ business activities by improving operating efficiencies and creating new technological service offerings. Prior to joining JPMorgan in 2001, Fasano served as senior vice president and chief information officer at American Financial Group, Inc. Fasano has served in a variety of other technology roles spanning a number of capital markets and proprietary trading businesses. Fasano received a master’s degree in finance from Long Island University and a bachelor’s degree in computer science from The New York Institute of Technology.

JPMorgan recently implemented a centralized repository called Global Market Reference Data. What was the impetus for it and what makes it “one of the first of its kind”?

The impetus as I understood it, because the project itself predated my joining the firm, was essentially to consolidate reference data within the investor services business in a central place to allow us to enhance the quality of the data and manage it more efficiently and effectively from an operational standpoint…Initially we were looking to create a utility of value to the entire JPMorgan community and have an opportunity to sell that in the industry.

What is the underlying architecture and what kind of data does it contain?

I’ll answer the data question first. It contains about 4.5 million securities of which 1 1/2 to two million are systematically validated by over 900 business rules each day. That’s how we go about cleansing data from the multitude of vendors we subscribe to.

The architecture is quite easy to describe: an IBM RS/600 running an Oracle database. Our application framework is from company called RogueWave. Essentially [RogueWave] is a set of tools and technologies to build and manage the GMRD application. We also lay on top of that a messaging application called MQSeries and IBM Websphere. This project was underway for between two and three years from concept to implementation and post testing.

Can you point to any early ROI since GMRD has been in use?

I can tell you specifically, it’s allowed us to consolidate many disparate databases we were housing in our production systems…beyond that is the operational cost of maintaining each of those databases individually and ensuring the quality of information separately, was a much more complex process to manage. By consolidating the data in a central fashion and developing over 900 business rules that systematically assess the accuracy of disparate data sources, we’re much better able to ensure the consistency and quality of that data.

We use about 12-plus sources of data that is electronically fed from suppliers of information into our systems and we store it in the database…if there are any consequences with the data it will show up on a repair queue and our operations staff will investigate and repair the information as appropriate. [The information enters the system] essentially through electronic high-speed communications between our mainframes and our suppliers. It also allows us to do data cleansing in a much more systematic way rather than having a manual process.

We’ve consolidated about seven to eight major databases into this single database and we have plans to consolidate more as we go into next year. With respect to our own processing systems, ultimately we’ll consolidate as many as is practical into this corporate repository. At the corporate level it allows many of our sister organizations to leverage the information and the technology to permit them to consolidate reference data as well in a similar fashion. [GMRD] is serving our systems, not individuals. GMRD and the information it contains is at the core or center of most of the securities processing systems. Capacity has not been an issue from this system because of how it has been engineered. It is a truly scalable system and it can support very substantial processing requirements.

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What else is occupying the bulk of your attention these days?

I’m global head of technology for investor services, so we have quite a few development projects underway relative to Internet, client facing and relative to our outsourcing business, which is extremely substantial for us. We’re building major systems to support our outsourcing business [such as] middle and back office processing systems, so some positions and balances, instruction entry and management and incremental accounting systems to allow us to support major clients from an outsourcing perspective. We’re also in the process of building an information product company that does analysis around cost of executing trades and other analysis around operating a funds manager business and we’re building the technology around that business. We have a substantial production system with $7 trillion in assets that we run.

Will IT receive a larger budget next year or do you anticipate any cuts?

Most IT organizations on the street are seeing their budgets constrained somewhat year over year based on the market we’re experiencing. We’ll see some minor shrinkage in our spending from 2002 to 2003 but we’re still maintaining an extremely substantial applications development [budget] as we go into next year. I run a production operation and…maintaining our production applications and environment on behalf of our clients is a core competence of ours. That budget is growing somewhat as we go from 2002 to 2003. My budget is split pretty well between production and development. My applications development budget — meaning my new investments — is shrinking somewhat, but not substantially so.

Q: What are your areas of priority for next year?

I mentioned the outsourcing business. It’s critical to meet our outsourcing clients’ needs so we have substantial applications and services that need to be created and put in place for our outsourcing clients for next year. The outsourcing business is about one and a half to two years old. We have a handful of clients and the pipeline is pretty strong so it’s a relatively new business when you consider our other businesses, custody and securities lending, have been around a while. Our clients in the average size of these deals are very substantial in tens of millions of dollars so it’s a very significant relationship for us and each [client] requires very specific management and specific technologies and our customers expect us to build these technologies on their behalf.

Q: What’s your view on implementation of new technologies and bleeding edge versus a more conservative approach?

One has to be balanced and it’s a matter of your risk tolerance as an organization and your desire to position your products and services as leading and innovative, and that can be done by leveraging technologies that have been around for awhile with innovative thinking, as well as leverage some more advanced technologies from the standpoint that services or technologies benefit the client or really enhance that capability for a particular client. We don’t take technology risk for the sake of technology risk. It’s from a very measured perspective.

How large is your IT department and what skills are you in most need of right now?

My org is around 1,500 plus people and we’re very active in looking at program and project management skills and people with those skills are very valuable to us.

Who do you report to?

I report to equivalent of the CEO of our Investor Services business.

Which of your skills has served you best in managing IT?

Given the complexity of this business, my ability to both negotiate and manage change and live within change comfortably, enables me to be reasonably successful in what I do.

What advice would you give someone looking to advance their career the same way you have?

Remain focused.

What keeps you awake at night?

We have a global business. In that business quite a lot of activities go on every day. I’m very concerned with meeting my clients’ expectations both globally and locally and making sure we do that.

What do you do in your spare time?

A couple of things. I have a very large immediate family — a wife and five children and some are teenagers, so they keep us quite busy with their activities and schedules. We also have quite a lot of friends in New York area. And my wife and I are pretty avid scuba divers so we do that both locally and globally. We’ll scuba dive almost anywhere, including in a cave, which we’ve done.

Know any CIOs or CTOs who might be good subjects for a CIN interview? If so, contact Esther Shein at [email protected].