VP Mike Ryan discusses how technology is modernizing financial institutions and why Freddie is joining the cloud crowd.
About a year ago, Mike Ryan had been perfectly content working as a cloud architect at a financial risk management company in New Jersey. But when former colleague, Freddie Mac's Chief Information Officer Stacey Goodman, asked him to hop on a plane to Virginia and find out what's happening at Freddie Mac, he couldn't turn it down. The opportunity to create the company's cloud program from the ground up was "very appealing." Recently Mike marked his first anniversary as VP of Technology Strategy. Here he discusses the current state of technology among financial institutions and the flurry of activities at Freddie Mac, most notably cloud migration, that are boosting our tech profile.
What role does technology currently play among financial institutions and how have these technologies evolved?
Mike: Today many financial institutions view themselves more as technology companies than pure finance companies. That's because they could not perform the most basic banking functions without the core technology that serves the business every day.
Investment banks have always been innovating to save money and to increase revenue, but about 15 years ago they started building computer grids — sometimes with more than 100,000 computers in them. Those grids enabled the banks to manage far more complex portfolios and manage regulatory capital more efficiently. The advent of cheap computers allowed them to have cost-effective means to expand business capabilities. With the rise of enterprise open source software, they were no longer beholden to a single vendor and its sometimes arbitrary, sometimes onerous licensing models, so open source allowed for a much lower cost point. The innovation happened across computer hardware, storage, networking — all of which became much cheaper over time. Banks took advantage of those innovations and developed hugely scalable systems that would allow them to grow immensely complex portfolios.
Are financial institutions changing the way they introduce and implement technology to employees, customers?
Mike: Absolutely they are. The customer experience has been very much transformed. Think of the way you interact with a bank today versus 20 years ago. It's become much more technology focused. Look at the way companies have introduced end user technologies, such as fraud detection and protections for risky transactions. Successful companies must balance what is working today with what needs to change tomorrow.
At Freddie Mac, we're moving toward a very efficient way of introducing new technologies — we're creating sandbox environments in the cloud that are isolated to let people do tire-kicking without putting our firm's data or network at risk. This allows us to collaborate with third parties more easily and for our data scientists to test out the brand-new machine learning algorithms in a sandbox environment. They can bring their test cases into that environment, check it out, and if it's not working, destroy the entire environment with the click of a button. No harm, no foul. But if the test is successful, we have a governance program for introducing new technologies that is becoming more efficient and streamlined.
Many financial institutions, including Freddie Mac, plan to move their infrastructure to the cloud. What does this mean?
From a Freddie Mac perspective, we're talking about having the ability to rent computers from somebody else, make use of them and shut them down when we're done. Instead of having to buy or lease computers, put them in our data center, and do all sorts of capacity planning and management, we can rent them to run whatever processing we need and give them back. While these activities are required for maintaining technology in a data center, they are not core to Freddie Mac's business.
What do you like about this job?
Mike: The idea of coming in here and having a blank canvas to paint our cloud strategy was really appealing. We've been working with some great partners in technology and in business. We have been able to do some pretty cool things with the Single-Family Innovation Lab (iLab), the data scientist community, and what's underway with our grid computing environment. Being the engine that allows our Modern Delivery program to have agile infrastructure to deploy things very rapidly — this is all really exciting. And the fact that Freddie Mac has made such a deep commitment to move to the cloud is the reason why I get up in the morning.