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Feature

The Jenga tower


30 Oct 2024

James Maxfield, chief product officer at DUCO, talks to Jack McRae about his career, leadership and the industry’s race to automate

Image: DUCO
James Maxfield was on holiday in Cornwall in September 2008, enjoying lunch and a day on the South West coast of England until he turned on the TV. The 10 o’clock news told him that he had lost his job and the world was about to go into financial meltdown.

His employer, Lehman Brothers, had gone into administration and he was in Cornwall without a phone signal.

16 years later, Maxfield is the chief product officer at DUCO but still considers that moment the toughest in his career.

“We came back home then saw it on the News at Ten — Lehman has gone into administration,” he recalls. “My immediate thought was about my young family, I had small kids and my wife. I immediately thought, ‘Oh gosh, I don’t have a job anymore. I don’t have any money.’ You obviously go through some quite personal emotions.”

Despite the difficult circumstances, and the lack of phone reception, Maxfield decided to remain in Cornwall — it was important not to panic. He did his best to stay “on the phone to people and keep them calm. There was also an element of trying to keep a little bit of perspective as well. We’re healthy, the world is not going to end, this is not life or death.”

Maxfield’s “very unique experience” taught him more than any other time in his career. As Lehman Brothers collapsed and sent their staff reeling, “you see and learn what good leadership looks like. You also see what bad leadership looks like.”

He is critical of the way in which “some people disappeared for two or three weeks to figure out what they were going to do with their own lives before they came back and looked after the people who worked for them.”

Yet, the leadership void left in the fallout presented an opportunity for Maxfield to step up. He explains he is “a big believer in being bold and taking opportunities, career risks and putting yourself in situations where you can test and push yourself. That is where growth comes from.”

Fortunately, Maxfield was granted that chance to be bold. “We were bought by Nomura and we had three months to put the two banks together and get connectivity to be able to go and sell products,” he says. “It was an amazing achievement and three months spent around some amazingly inspirational people.

“When you go through those experiences, they shape you. They help you organise and to help others navigate some of those challenges.”

Having helped navigate the challenge of merging the two operations in 2008, Maxfield explains that when DUCO “acquired a company in February called Metamaze, a lot of those integration lessons I could use again to bring the culture, people and technology together.”

Maxfield has been on a continuous journey of learning throughout his career, with his grounding coming in the depths of manual processing.

Hands on

“I did an economics degree, so I had an academic alignment [with financial services]. I took a path that was probably not uncommon in those days,” he explains. “You have an entry-level job, but at a bank where everything was manual and that gave you a really good overview of how the whole banking system works.”

While the heavy reliance on manual tasks helped Maxfield in his early years in the industry, he is shocked institutions have not adapted to modern technology. “You’ve got an industry which is still heavily reliant on spreadsheets, big inboxes and thousands of people doing manual work,” Maxfield highlights.

The technology deficit in the industry could also be having an impact on the younger generation coming through to the industry. There could be a certain level of disillusionment with the industry from younger people who have “grown up with an iPhone in the palm of their hand, and they’re used to a level of automation in their personal lives coming and now they are ticking stuff off with a highlighter pen on a big piece of paper.

“They might have a Master’s in quantitative economics and they’re coming in and doing spreadsheets.”

This may well be complicit in the evaporation of future talent and it is evident to see the scarcity of young people at conferences where “a lot of the leadership people I see now are people from my generation,” Maxfield says. “The younger talent coming in today doesn’t have the same experience, which is a byproduct of the entry-level jobs and early opportunities being different now.”

Maxfield argues that embracing technology is vital to attracting and retaining talent as “a lot of these tools are there now to make it a much more exciting proposition for people to come in and be innovative.”

Despite the allure of the latest technology, Maxfield heeds a warning to not be hasty. “You can’t just automate everything,” he urges. “You can’t just buy technology and plug it in. You have to really think about the business processes and the data that feed the automation and improve those as well as automating.”

In his current role at DUCO, he feels he has found a “platform that can solve problems with customers.

“Being able to bring technology and business process owners together and offer creative solutions is really important.”

The big shift

North America moved from a T+2 settlement cycle to T+1 in May and Maxfield has paid special attention to the shift. Based in London, DUCO’s chief product officer is keen to learn every lesson possible.

Maxfield explains that with the move to T+1, “the upside was that fail rates and match rates improved. There is a lot less risk in the system from that perspective and we should be excited. But again, I think it’s come at the cost of a lot of manual people in the process.

“What appears to have happened is a lot of people just added people to deal with the problem, which is telling me that they left it too late to automate.”

So, are the UK and Europe prepared for automation?

“The US experience was quite unique to the US. The change across Europe and the UK is going to be a very different one — a much bigger problem and much bigger challenge,” Maxfield explains. “Over the last 15 years, the headline has been that processing has to get faster. They went from T+3 to T+2 and now to T+1, everything is just getting faster and when you have quite low automation levels, it is going to be a challenge.”

The UK plans on making the shift to a shorter settlement cycle in 2027, and while that may seem way off in the distance, Maxfield stresses that “the clock is ticking now.

“In this industry, that is not a particularly long timeframe to get automated. This will be the tipping point for a lot of organisations to fundamentally rethink about the technology they are using.”

He adds that the transformation process is not as simple as just “buying a T+1 system” and that “institutions are going to have to fundamentally change all of their systems. There’s so much complexity in there; data, risk, regulation.”

Constantly evolving regulatory and technological challenges have created what Maxfield describes as a “Jenga tower”, with “so many layers of old technology layered on each other.”

He considers this a particular issue for the UK, an “unintended consequence [of] the Senior Managers and Certification Regime that puts personal accountability for things going wrong on an individual in a firm, has made people very risk averse.

“Every decision is quite personal. They think about their bonuses, or if they have to give money back, or if they might go to prison. These are all extreme things but it has created a lot of risk aversion — a focus on keeping the status quo and not doing anything too transformational.”

This approach has meant institutions have continuously patched their technology with new layers, but this will not be enough to cope with the shift to T+1. He is concerned that across the industry, many institutions may “start trying to unpick that like a game of Jenga. You pull something out and you’re not quite sure what’s going to happen. That’s a very real challenge for everybody and especially the big global, universal banks.”

As the seconds tick by, Maxfield, now a leader in the industry, is using his experience to call on others to seize the opportunity.

He urges: “You’ve got two years [until T+1], and there is a lot of work to do. We can use this as an opportunity to service our engine.”
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