How can firms embrace innovation and orient their culture toward one that emphasizes development and technology?

It's a challenge posed by the increased digitization of wealth management -- brought by new, digital-first competitors offering low-cost, scalable advice platforms and an increasingly digital-first client expecting an Amazon experience on their phones and the ability to access information any time.

Additionally, there is added pressure from the fiduciary rule, which is expected to spur widespread innovation of products and platforms to capture smaller accounts.

Sumedh Mehta, the newly appointed chief technology officer at Putnam Investments, says a big step is changing the way firms regard their technology departments.

"What our kids have taught us is the consumerization of technology has reached such a level that there is really value to be derived," Mehta says. "It's all completely digitized."

Read more: DoL Fiduciary Rule May Spur Product Innovation

One hurdle he notes that his firm already made is including its information technology department at staff meetings to partake in key decisions at the firm, a step he says is needed to maintain relevance.

"You need an environment, and you can't do this everywhere because if you are too big, and one part of a bigger organization and you try to act differently, it will put you back in place," he says. "At Putnam, I can get you on the I.T. function, and I can set that tone."

What do you want to accomplish in your new role at Putnam?

It has surprised me to hear that others are still thinking archaically. In the 80's, I.T. was a data processing unit. Today, it has a seat at the table in staff meetings with business leaders. Without technology, you really don't have that advantage.

If we can impact every employee and every customer for every process in the company, and make sure that it's a delightful experience, then we have achieved our goal. It's a lofty standard, but it's the standard that's right for today.

Why was Uber able to do what they were able to do? It's because they went soup to nuts. They really redefined what a cab driver is. They didn't want to do that. It's just how it molded itself. Other companies came up with the concept of booking something online to get a cab, but that's just one part of the value chain. If you don't attack it all the way through, you will miss the boat.

The role of the product manager is to be at conferences, to be at meetings, to have a viewpoint on how a trading platform that is going to evolve, and not to wait for the trader to tell you how it will evolve. It's a partnership. We can provide the technical nuances and know-hows about how the evolution is going to happen, and they will talk about what they want out of business. You combine that, and it becomes really strong when the work for technology is aligned to a business call.

Where do you see the need for change, beyond understanding the cloud computing process and taking advantage of the benefits of data analytics?

You're right that the financial services industry has embraced technology and created innovative ideas -- tech writing in brokerage accounts, online transactions and it has continued to evolve -- but the thing is that the rate of change in technology is the fastest in human history.

Companies out of Silicon Valley, for instance, with $2 million in venture money and $1 billion worth of market capital, are coming out driven by technology, facing an industry and creating disruption. That's the threat to our business. It's happening, and either we are going to be an innovator or we are going to sit back and see our market share erode.

We are innovators culturally, so we want to extend that lead in technology and say, "Let's go out to Silicon Valley and understand what's going on out there." Let's see who we want to partner with and let's not sit back, because we are in the business of helping people retire and no one should be able to do that better than us. 

How do you break down the data discussion into small things that people actually can understand that are immediately actionable to their job functions?

What data analytics would do for our data business in the next two years, people in the data organization haven't been able to do in the data organization in the last 20 years.

We have created the big silo of, "Here it is. Everybody can now bow to it and say we manage, maintain, govern, run it and we are secure." But the scope has dramatically changed when you look at cloud computing.

Everything is going on outside of the world and the scale that you are built for to handle that type of data, you cannot possibly manage if you use the same principles. You have to have a shift in paradigm. You have to think like a teenager and you say that collaboration is a watchful tool. It is what we do now.

You have to have a mindshift change and say, "Let's get the security guys in, let's get the risk guys in and let's build a solution. What is it that we have to do to enable this? It's not acceptable to be left behind."

There seems to be a creative thought process on external innovation and yet, a very utilitarian, very stark approach to internal technology and internal processes. Why is there that divide?

I think that if you go to any one of our competitors, and go to their I.T. departments, you will see a similar theme around a lack of engagement from business leaders and partners, very select people meet with businesses, and business partners never come to the I.T. floor; then you are truly a silo.

What we do at Putnam is look at it differently and say, "In the course of your day-to-day business, technology is the natural course and it can give you an advantage." What technologies have to understand is their business goal and what they're trying to accomplish. They must ask, "Are we moving to kill projects that do not provide that business value but we thought were always necessary in order to switch the budget around to help them get things done that they really care about?"

How many times have you heard the conversation, "That's new requirement and it will take new money to do it?" What does that mean for an internal department and why do we behave that way? If we made ourselves a consulting firm within the organization, which is the way we look at ourselves, all of a sudden we embrace business requirements. The moment you embrace that, we prioritize it so it becomes a natural act.

How much can technology bridge the gaps between departments?

I think if you say that you're sole purpose is to serve the organization and to serve the business community, you change your thinking. If you say your sole purpose is to manage your territory, how big you can get and you manage your footprint, that is sort of the status quo and nothing will change.

So, you need an environment, and you can't do this everywhere because if you are too big, and one part of a bigger organization and you try to act differently, it will put you back in place.

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