UBS looks to build tech solutions in minutes

A change in UBS’ approach to software engineering could see the Swiss bank condensing solution development time from months to minutes, according to Rick Carey, group chief technology officer, UBS.

“In the world of a hybrid pod, and a digital world, you actually should be delivering solutions in minutes. To be absolutely clear, we don’t do that today, but that is where we are headed,” says Carey.

“UBS Group Technology has multiple big bets about the future. One of those bets that we have defined is to create a completely dynamic engineering experience. To be completely dynamic means the moment you have an idea, a client need, a requirement, or whatever, you have everything at your fingertips to do the engineering. You don’t wait for anything. On the flip side, we don’t want them to actually be consuming services when they are not needed.”

Over the past year the bank has shifted its engineering culture to focus on core capabilities – moving away from a traditional ‘process and control’ emphasis.

UBS recently launched hybrid pods – an engineering culture campaign to join the business and technology function together. The pods are small teams of people who are brought together from across the bank which aim to identify changing client requirements and build out functionalities in a short space of time.

The hybrid pods are expected to increase productivity and break down some of the silos that were developing across different teams in the bank, according to Zoe Evans, UK and investment bank head of technology, UBS.

But as the bank looks to increase the speed in developing capabilities, there are concerns that their tech vendor partners will be able to keep up and adopt to the new engineering approach, says Carey.

“We are not thinking in applications mindsets as much anymore,” he says. “We are thinking about services and capabilities, we don’t want to buy software in a traditional way and then install it, run it, and maintain it ourselves and do that. We are actually looking for services. The software-as-a-service model is not exactly what I’m talking about, but then the whole delivery mechanism of capabilities changes dramatically as you go forward in the future.”

In 2019, UBS decommissioned over 400 legacy applications and deployed 1,100 robots, Sergio Ermotti, UBS’ chief executive officer said on the bank’s 2019 fourth quarter earnings call.

“We’re not interested in moving legacy apps from on-premise to the cloud, we’re much more interested in ensuring that we’ve got the right service and we build that in the cloud and then we decommission the legacy,” says Evans.

“Right now, the average lifespan of an app is about five years with quite a fairly large standard deviation – you have apps that go for decades and you’ve apps that only go for a short amount of time,” says Carey.

“If you keep an application an average of five years, then you should be decommissioning about 20 percent of your portfolio every year. As that lifespan average decreases, then your decommissioning percentage will actually go up because shorter life span means larger decommission percentage,” he says.

The transition in solutions building comes amidst greater restructuring at the Swiss bank.

On January 7, Bloomberg reported the bank has planned to cut up to 500 jobs in a restructuring of its wealth management business.

“We will look at the synergies, and think about further platform synergies as much as possible,” says Evans.

The investment bank reported a $22m loss before tax for the fourth quarter of last year. Ermotti said on the earnings call that in terms of profitability, the investment bank could not be “satisfied” with its performance in 2019.

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