It used to be that bank CEOs wore their lack of technology expertise as a badge of honor: “Hey, I came up through the lofty halls of Credit; I don’t need to know anything about technology.” However, times change. Now that product delivery, service, underwriting, sales execution and marketing are all inextricably attached to technology, today’s CEOs understand about 300% more about the subject than they did even 10 years ago, realizing that they must have at least a layman’s understanding of how to apply technology if they expect to reign as a credible leader of a bank today.
Most bank CEOs, by now, have taken the right approach to technology by recognizing its unquestionably strategic nature. They have set out a strategic vision and made sure there are mechanisms in place to support that strategy with technology, including formal Information Technology (IT) governance, IT steering committees, project committees and post-implementation technology reviews.
Formalizing and promoting IT to strategic status has been a massive step in the right direction, but simply laying out the vision isn’t enough to assure smooth IT sailing. The strategy of deputizing the chief information officer (CIO) as the Standards Enforcer for the CEO’s high level vision continues to consistently fail. No, sometimes the CEO has to revert to turning red in the face and pounding the table. No matter how elegant the vision is communicated and backed up by IT governance, sometimes the CEO has to publicly blow some steam out of their ears to get people’s attention. Here are some areas that can prove especially troublesome:
It’s not the vendor; it’s you. Consider technologies such as contact management, data warehouse or sales/referral tracking. In these cases, technology vendors have developed what their bank customers demanded, yet projects to implement these technologies rarely succeed. The projects fail because they span across many or all lines of businesses and each business line has its own agenda on how/when to use the technology in question.
In the case of a contact management system, for example, maybe branch staffers are on board and use contact management all the time as instructed. However, commercial lenders like their old systems so they use the new system only for the week following implementation. And maybe the call center thinks the new system slows them down too much so they’ll use it only when call volumes are low. Sound familiar? A project designed to standardize bank-wide behavior and provide valuable information to senior decision-makers fails because some end users decide their spreadsheet for tracking customer contacts works just fine!
When this happens, CEOs have to do their best Nikita Khrushchev impression by banging a shoe on the podium and lay down the law regarding who will use the technology; under what circumstances it will be used; and the location of the Human Resources department where non-compliant employees can pick up their final checks. Most CEOs understandably do not prefer to manage like this, but strong-arming from the corner office is sometimes necessary to remind employees that some aspects of the job are simply not optional.
When there is no right answer. Where should management reporting take place? In IT? In the business lines? Accounting? And should system functionality expertise be housed in IT or in the business lines? Bankers spend countless hours debating these questions, which all lack a “right” answer. Bankers argue about these pie-in-the-sky issues while nothing practical gets done as a result. Now is when the CEO has to step in and act like an executive. Pound on the desk and tell the staff how this is going to work. There is no right answer so just take a vocal stand and keep the organization moving.
New releases. One of the most common disagreements between IT and the business lines is how to deal with decision making regarding new system releases. The business lines frown on entrusting to IT the decisions regarding which new features are implemented and when. Then again, the business lines really hate reading those pesky release notes from the vendor, often hundreds of pages, which explain the new features and how they will affect existing functionality.
So, the business lines get both passive/aggressive and lazy. They let IT decide what to implement and then they complain about those decisions. This is where some refereeing by the CEO is mandatory by insisting that business lines can take the time to read the release notes and actively get involved with new release decision making or let IT handle the new release decisions and keep their mouths shut if they don’t like the results. There really is no middle ground and the CEO is the only individual who can shame staff into the right behavior.
So, three cheers for bank CEOs who have developed a great strategic vision and the IT infrastructure and governance processes to support that vision. And four cheers for CEOs who acknowledge that some strategic pushing and shoving is still necessary to supplement the vision!
The Community Reinvestment Act (CRA) was designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Recently, a final rule was announced that updates...