The curious thing about banking technology is that the more complicated it gets, the more sophisticated it gets, and the more technical it gets—the more human it gets.
These days it’s all about customer centricity—making things easier, quicker, and more convenient for the customer. New technologies enable all that, just as they change the relationship between those in charge of the technology and those in charge of the business.
Happier customers equate to improving returns. Better technology equates to happier customers. The conclusion: better technology equates to improving returns.
This math carries implications for every bank’s technology leaders.
Techs can’t just live in the ivory tower
No longer can the IT function—under the Chief Information Officer—restrict itself to keeping the lights on and running the help desk. It’s been said many times that the CIO needs to sit at the table with the other chiefs and lend a hand in boosting the bank’s business.
Here are just a couple of recent examples of sentiments along these lines:
• “The role of the CIO is evolving, placing them not only as a critical interface between IT and the business, but ever more at the heart of business transformation.”—Scott Leckie, CTO, Axios Systems
• “Today’s IT leaders are responsible for more than overseeing technology breakthroughs, they are also integral to advising chief executives about the organization’s business strategy. With customer experience as a key competitive advantage, never before has the combination and integration of back office and front office strategies been more critical.”—Tom Rosamilia, senior vice-president, IBM Systems and Technology Group
Without tech leadership, every function goes own way
There’s no question that technology now lines the avenue to better returns. A quick summary by Celent concludes that North American IT spending by banks will increase 4.5% this year—followed by another 4.2% increase next year.
On the agenda: self-service initiatives; digital banking projects/overhauls; branch transformation initiatives; omnichannel endeavors; mobile banking expansion; analytics; and security investments, just for starters.
Other areas will include improved aspects of corporate banking and banking for small businesses.
Behind all this comes an increasing usage of cloud-hosted solutions.
With all these categories of new technologies hitting the front burners, it comes as little surprise that individual business units take it upon themselves to grab them as quickly as they can—a phenomenon known as shadow IT.
One recent measure of this comes from a survey conducted by the Cloud Security Alliance.
The group’s study found that nearly 72% of the 200 executives and IT managers polled admitted that they did not know the number of shadow IT apps within their organization—but wanted to. At the same time, 61% of the companies involved agreed that security of data in the cloud has shifted from the IT room to the boardroom.
“As companies move data to the cloud, they are looking to put in place policies and processes so that employees can take advantage of cloud services that drive business growth without compromising the security, compliance, and governance of corporate data,” says Jim Reavis, CEO of the Alliance.
A separate survey by BT—which provides communications services and solutions—had similar results, with 77% of the U.S. IT leaders it polled seeing shadow IT at work in their organizations. On average, it found that shadow IT now accounts for 27% of an organization’s IT spending in the U.S.
Curiously, though, BT reaches the conclusion that this can actually work in favor of CIOs, in the sense that it lends credence to the shifting role of that position. For example, BT’s report finds that “the growing confidence of departments in buying their own IT solutions is shifting the CIO’s focus away from hands-on support to a more strategic role centered on advice, governance, and security.”
Says Luis Alvarez, CEO, BT Global Services: “CIOs are perfectly placed to nurture creative uses of technology throughout their organizations while keeping a strategic view. Indeed, our research shows that the board expects nothing less.”
Rethinking CIO’s role
So maybe it’s time to formally redefine what a CIO is and what that office does. Maybe, as some propose, it’s time to add a new title and area of responsibility.
The Association for Financial Professionals, following their own survey (underwritten by Capital One Bank), asks the bold question: “Does your business need a data intelligence czar?”
That survey begins with a finding that financial professionals at companies with successful data intelligence programs report a high level of satisfaction with accuracy (85%), relevance (87%), and the ability to reach actionable conclusions (79%) based on data analysis.
Diving deeper, the association’s survey finds that “whether or not a company centralizes its data intelligence function, 44% of companies do have a single person who is ultimately responsible for strategy and execution of data work.”
To be fair, according to this report, few if any of these companies actually call that person “czar.”
Time for “Chief Data Officer”?
But this research meshes with research by Gartner Inc., which seeks to separate the functions of the CIO with a new office called the “Chief Data Officer.”
Gartner stresses that “the IT organization, led by the CIO, must play a role in both enabling digital business and ensuring security and compliance.”
The CDO, on the other hand, using different tools and having different responsibilities, would focus on digital innovation, change management programs, and transformation.
“CIOs and CDOs should have distinct and separate roles in the digital era, and they will need different skills and capabilities,” says Debra Logan, vice-president and Gartner Fellow. “The CDO is a peer of the CIO, but practices a different discipline. The CDO also becomes an advocate of information, not just a governor of it. Increasingly, successful information governance is about advocating the use of information as a source of value, not just controlling and monitoring it.”
And that does, kind of, sound like a czar.
Has your bank made such a move? Tell us about it in the comment section below.
Sources used for this article include:
- PPP Delivers $140B in 2021 as Biden Prioritizes ‘Mom and Pop’ Businesses
- First National Strikes Merger Agreement with The Bank of Fincastle
- US Banks Resilient Despite Pandemic
- Bank of Hawaii Launches ‘Branch of Tomorrow’ Premises
- Banking on Diversity initiative launched to target minority businesses