Many financial institutions are rethinking the makeup of their Board and the possible pathways available to bring different backgrounds, talents, and experience to their institution. Usually, these discussions evolve around getting Board Members who are younger, of a different ethnicity, gender, or profession.
Along with these, I believe that efforts to create a more diverse Board should also include seeking out Board Members that bring an interest in, and a willingness to explore, technology. Technology adoption as it applies to outward facing services is absolutely necessary for continued viability alongside competitors; most institutions realize this and are doing the necessary steps to update their mobile offerings, embrace social media, and so on. But there have also been many advances in technology to support and improve internal processes as well and Board Members who commit to fulfilling the Board’s role diligently should also be aware of and open to these, especially when competitive and strategic insight can be gained.
According to an article by McKinsey & Company, there are critical questions that all Boards should ask in regards to technology strategy. The article offers some valuable takeaways. I’ve spun some of their key points into items addressing technology-related issues strictly from the vantage point of my years of experience working with banks and credit unions and idea5’s area of expertise.
1) Competition: Savvy organizations have the ability to know more about what their competition is up to than ever before. For today’s financial institutions, the traditional reliance on peer comparison doesn’t go far enough. With the right technology, the data needed to identify, understand, and benchmark performance and market penetration with your local competitors (banks AND credit unions) is easier than ever. Boards should expect and request reporting that identifies and addresses these findings.
2) Economic Landscape: Internal data can tell you what your existing customers are doing at your institution. External data can tell you what your potential customer base is doing. Does your Board have access to the right information needed to make informed decisions regarding new markets? Decisions regarding product offerings, geographic presence, etc. shouldn’t be made until the Board has reviewed data on local population and income trends, demographic analysis, and other related local economic conditions. The Board should understand the importance of regularly reviewing external economic data for the institution’s local area, not just national trends.
3) Performance Improvements: There are a growing number of online tools that can help the organization speed internal processes without draining the time or resources of the IT department. The McKinsey article also points to the boost in performance and reduced overall costs that can be experienced with the adoption of automated processes and indicates knowledge of a bank which was able to reduce operating costs by 10% through automation. Routine assessment and review of available solutions should be done, including an established metric used to forecast savings. While many of these technology implementation decisions won’t lie within the scope of the Board’s oversight, the impact on the bottom line is and should be on their radar.
4) Strategic Insight: With the increasing availability of data, both internal and external, institutions should be looking for ways to best leverage the insight that come from its use. Used correctly, external data supports many reporting and research tasks, including improved strategic insight. However, the tasks of collecting, formatting, updating, and visualizing this data can be a drain on time and prone to the incorporation of errors. Institutions who can automate much of this will gain access to the insight in the data much quicker. The ability to do on-the-fly, ad hoc research to answer questions from the Board can also keep strategic meetings on track. The use of visualized, relevant, external data can also speed Board buy-in for presented strategic plans.
Board Members who exhibit technology competency or a willingness to acquire it will enable financial institutions to give technology the proper level of priority and attention needed in today’s competitive, connected marketplace.