TECHNOLOGY
Why banks need more tech experts in their boardrooms Massive adoption of banking technology without critical tech advice from experts could spell doom for lenders.
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rtificial intelligence, machine learning, data analytics, online apps – the finance world is all about the tech and the digital now, with banks noted to be massively adopting digital technologies over the past five years, according to a recent survey by professional services company Accenture of 2,000 directors from the world’s largest banking institutions. But even with the rapid adoption of tech, banks’ board rooms still feature a severe lack of experts in this field. Only 10% of boards of directors have tech expertise in 2021. Less than one in ten of board members from China (4%) and Japan (7%) have a tech background; Australia, just a little above that, at 12%. Having board members with tech expertise is important as the board can often be critical in advising on how to minimise the risks and maximise the benefits of technology investments, according to Fergus Gordon, Managing Director and Banking Industry
In 2015, only 6% of boards of directors had tech expertise – that number increased to 10% globally in 2021
Lead, Accenture. “In general, we recommend that banks strive to fill 25% of their board of directors with technology experience – so there is still work to be done,” Gordon told The Asian Business Review in an intervew. A study by Accenture found that only 6% of board directors for banks have any technological expertise. What does this tell us about the nature of tech leadership and direction of financial institutions? When we conducted this research for the first time in 2015, only 6% of boards of directors had technology expertise – that number increased to 10% globally in 2021. The pandemic showed just one reason why technology experience at the board level is so important. The pandemic forced many banks to quickly shift to digital touchpoints and accommodate employees working from home, which required immediate additional technology investments, like accelerating cloud adoption.
A study by Accenture found that only 6% of board directors for banks have any technological expertise
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THE ASIAN BUSINESS REVIEW
The perspective of the board, which has a high-level view of the organisation, can help advise which investments are compatible across various business units – and boards with technology experience can provide invaluable guidance. Banks are also facing complex decisions regarding how best to transform their core systems – whether to build or buy and at what scale – and those choices will have long-term implications. Whilst banks spend huge sums on financial technology, a lack of tech experience at the boardroom level could ultimately undermine these investments. Why do you think banks have been quite slow to appoint tech experts in their board? What challenges are banks facing in building up their board’s tech proficiency? Banks haven’t made much progress in appointing tech experts to their board since the last time Accenture carried out this survey in 2015. Back then, only 6% of bank board directors had technology expertise – this was an era when cloud was gaining traction and emerging technologies like blockchain and AI were attracting interest from the financial services sector. The inertia is likely the consequence of a sector steeped in tradition. This is not necessarily a bad quality when that tradition encourages trust from customers who place their money with you, but it can be an obstacle when the pace of change accelerates and demands further innovation. The importance of technology expertise within banks goes well beyond just the board level; banks need to elevate the skills and knowledge of key technologies that are essential to growth, like cloud, AI and cybersecurity, throughout the entire organisation. But a board with a high level of technology expertise can help drive and navigate complex operating model transformation, monitor progress and help steer the ship if it appears to veer off course.
