In my work as a consultant and attorney to community banks across the nation, I have the frequent opportunity to facilitate long-term strategic planning sessions for boards and senior officer groups. I generally facilitate dozens of these meetings each year, which is about all I can fit in with the other things we do in our consulting and law firms.
At these long-term planning meetings, one issue that always comes up when I ask the directors what keeps them up at night is the issue of technology.
Information technology and all of the associated security issues have garnered a lot of attention in the banking industry, especially from regulators.
Community bank boards of directors are constantly faced with the reality that the bank must “keep up” with technology in order to compete. They are likewise faced with the reality of data breaches, customer privacy, and general cyber security in the digital age.
It is these two sides of the technology coin that take up a good portion of strategic planning sessions:
1. How do we use technology to attract the next generation of bank customers?
2. How do we make sure that the technology we are currently using in the bank is secure?
Challenge of evolving tech
Keep in mind that most directors of community banks (although it is changing for the better) did not grow up as digital natives. In fact, most of them were not even close.
I would still wager a guess that the average age of a community bank director these days is well into his or her (mostly his) 60s. In some meetings when the technology discussion starts you can see the eyes of some of the older directors simply glaze over.
They know they need to hear about it, but they do not have the foggiest idea of what the issues are or how to address them.
There are some exceptions, of course. I do recall one director who was a retired medical doctor of the older variety who decided he was going to learn about bank technology.
He even went on the bank’s technology steering committee, which was populated before his appointment solely by bank officers.
Fast forward three years, and this retired medical doctor director in his late 60s has simply become a bank technology expert.
Granted, that is a rare occurrence. Most boards depend on their senior management group when it comes to technology security and what needs to be done. It is a great worry, but it is not a great enough worry they feel they can address personally or meaningfully contribute to the conversation.
Boards and the younger customer
Attracting the younger generation through technology is a little bit different for the older directors. They at least comprehend the idea and purpose of the discussion, although they do not really understand the technology that is necessary to accomplish the task.
For the directors, social media platforms such as, LinkedIn, Snapchat, Twitter, Facebook, and Instagram are words they have certainly heard, but not things that they actually use.
This whole issue of attracting the younger generation also comes up in the discussion about geographic expansion (i.e., “Should we build more brick and mortar branches or just forget the whole thing since these “kids” will do everything on their mobile device?”).
Time to move the ball forward
Although there are exceptions, for the most part technology issues are baffling to most community bank boards. This needs to change.
I have had some board chairmen indicate to their directors that if they do not understand technology enough to even use a board portal to get their information, then they need to get off the board.
Sounds harsh, but it is probably appropriate.
Help your board along
If you would like to take a “softer” approach, consider providing technology training to the board.
Tailor it appropriately. Directors do not need to be well-versed in sending tweets or spend time trolling competitors’ Facebook pages. But they do need to have a sufficient understanding of how technology, social media, and cyber security impact the bank’s operations and profitability.
Technology and cyber security are “when, not if” issues for community banks. In order for directors to appropriately carry out their fiduciary duties and lead the bank to a successful future, they need to understand the industry and where it is headed—technology included.