Interview

CIO interview: Simon Moorhead, Bank of England

Kathleen Hall

Simon Moorhead began his career as the Bank of England’s CIO with a baptism of fire, having started in November 2008 – just two months after Lehman Brothers collapsed and a year after Northern Rock was rescued by the government. 

“It has been an interesting time,” he says. “At that point we were still putting together the sum of the policy responses to the financial crisis.

“But it is also fascinating to work for an organisation that feels right at the heart of the UK financial system and somewhere that appears on the News at 10 twice a week and in the FT almost every day,” he says.

As Bank of England (BoE) CIO, Moorhead oversees the technology implementations which are made as a direct response to policy decisions. He says its focus on public policy goals filters down through the rest of the organisation and how the IT department functions.

The BoE is also responsible for banks settling with one another, and its IT systems are crucial to those transactions. “That process is something like £570bn every day in the way they settle their high-value transactions. And that is done via the Bank of England. So the systems we use to support that are not ones you want to go down!”

One recent example of the topicality of his work was the BoE’s Funding for Lending initiative, which rewards banks for increasing their amount of lending to the economy by offering them below-market lending rates. “That was a policy reaction, but sitting behind that is a whole load of IT application processes that support the complexity of how that works in practice,” he says.

“One of the team was working late, doing all the application support and building the systems. When his wife asked what it was that was keeping him so busy, he pointed to Newsnight and said ‘it’s that’, which really brings it home how influential the work is.”

Reliance on in-house IT expertise

The BoE has a predominantly in-house IT function, with a team of 360 IT staff across an organisation of about 2,000. The team delivers the majority of the bank's business applications, IT infrastructure and support, and datacentre management. 

“I think that is unusual these days,” says Moorhead. “We haven’t pursued any grand outsourcing ventures. But we will commission third parties to do various things for us, such as parts of the network and telecoms.”

The implementation of the IT systems for the Funding for Lending initiative exemplified the benefits of having a pool of in-house expertise, as it was able to build a new application in just six weeks, he says.  

“We would have struggled if we had a series of third-party suppliers supporting different parts of the operation."

Moorhead admits that relying on in-house IT has some downsides, however, particularly in the capacity being finite. But he says the bank does have framework agreements with organisations, which allow it to call on certain skills at short notice when necessary.

Managing the IT estate

As well as being reactive to policy by putting together new IT implementations, Moorhead also oversees the organisation’s existing IT estate.

About a quarter of the BoE’s overall IT budget is invested in infrastructure, both in renewal and innovation, a further quarter goes on business change, and just over half in supporting day-to-day functions, he says.

“Broadly, the budget stays the same. It probably represents 15-20% of our costs.”

There has been much criticism of the banking sector’s legacy systems, with trade body Intellect having called for regulatory intervention to overhaul IT in the interests of greater transparency. But Moorhead believes there are ways of creating more transparency without a complete systems overhaul.

“We are seeing a greater adoption of management information, business intelligence (BI) and reporting tools that sit alongside the heavyweight transactional applications.

“One of the things we’ve done is to put a BI reporting layer on top to provide information on individual banks' patterns and flow of funds through settlement systems. That allows them to make better decisions about liquidity and save millions of pounds. There are alternatives to completing the overhaul of the entire infrastructure – which clearly carries its own risks and is not something to be taken lightly.”

Many of the BoE’s systems are bespoke, and Moorhead cannot foresee it moving to a fully-fledged cloud model any time soon.

“Consistency of supply is really important to us, so should there be another instance of the financial crisis to respond to, we couldn’t risk that happening the week there’s an infrastructure upgrade with our service provider.”

But the bank is adopting greater virtualisation across the estate, including desktop aggregation. 

“Quite a lot of work we do is making sure the service we provide to frontline staff is as flexible as it possibly can be. Which is partly about resilience, so individual PCs or applications don’t fail, but it’s also about speed of change, so it’s easier to change them if they are operating in a virtual world.”

Equally, he says the organisation is not quite ready for a bring-your-own-device (BYOD) scheme, although it is broadening its range of mobile devices.

“The BlackBerry is probably the device of choice for most of our frontline people. That may or may not change, as we become more comfortable with Apple devices and Windows 8 comes on board tablets.” 

The Microsoft platform would be easier to integrate with other frontline business devices, adds Moorhead.

Another key area is collaborative working. The company is already using Microsoft SharePoint to collaborate, and has seen a high level of adoption of instant messaging tools among staff.

“We work with some of the smartest people in the field – very often those people have come in straight from academia or other institutions and carry on with their research. There are powerful sets of information those teams are working on, so being able to share that is important. Some of the collaboration-enabling technologies have gone down very well,” he says.

Virtualisation provides much-needed flexibility

But with a reasonably bleak economic outlook in the UK and financial storm clouds gathering across Europe, how confident does Moorhead feel about his position to react to any further policy-led IT implementations?

“I think we will be in a better place to respond [to further economic challenges] because we are simplifying the estate and making sure IT applications are more virtual,” he says.

Such a move is optimising the IT function’s flexibility. “That goes right down to trivial examples. For instance, once we introduce a virtual desktop for our staff, it will give them the ability to have different versions of an application running at the same time. That again makes it much easier to manage operations.”

 


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