Are Bank Boardrooms in need of more Air Jordans instead of Pinstripes?
Published 31 March 2021
The world’s largest banks continue to lack technology expertise and digital approaches, even as adoption has increased.
According to a new report from Accenture, based on an analysis of the professional backgrounds of nearly 2,000 directors of more than 100 of the world’s largest banks by assets, found that while banks are ramping up their technology investments to keep pace with changing consumer demands ― such as the growing need for digital interaction and remote working as a result of the COVID-19 pandemic, the Boards of these banks lack the technology expertise to minimise the risks and maximise the benefits of their technology investments.
Rapid tech adoption
“Much of the disruption brought about by the pandemic has led to a rapid shift within banking to more digital touchpoints, requiring speedy technology investments,” said Mauro Macchi, who leads Accenture Strategy & Consulting in Europe. “Banks that are accelerating their cloud adoption to better manage change would benefit from a board with technology experience that can help ensure that technology investments are compatible across various business units.”
The report does not give particular pain points but has chosen to generalise a bank’s approach towards tech adoption. This gives rise to the debate again on whether banks need to leverage tech or become technology companies themselves. One cannot expect the latter as they are not in the business of tech.
According to the report, Accenture recommends that 25 per cent of banks’ Board should have technology experience. While the world’s largest banks have made progress on adding technology experience in the boardroom ― which Accenture defines as executives holding or having held senior technology positions at a company or senior responsibilities at a technology firm ― that progress has been slow.
For instance, only 10 per cent of all board directors, as well as 10 per cent of the CEOs on the boards, evaluated for the report have professional technology experience, up just 4 and 6 percentage points, respectively, from five years ago.
In addition, the number of banks whose board has at least one member with professional technology experience has increased only 10 percentage points in the past five years, from 57- 67 per cecnt ― meaning that one-third of banks still have no board members with professional technology experience.
Tech’s tango with Banker’s trust
So, does this mean that ‘technology experienced’ professionals can better navigate any disruptions around the corner? The answer is nuanced. “Banks are traditionally regulated and resistant to change. Parachuting a few tech-savvy Board members can add some acumen,” says Nitin Kumar, Executive Chaiman at Ligl and author of a new of the book CEO 3.io -Driving Exponential Change.
However, Kumar added that they need to ensure that disruptive and new technology is used to develop new markets or new value propositions and not make the old operations, products and services better.
The report, on a positive note, while only 19 per cent of the directors with technology experience five years ago were women, that figure is currently 33 per cent.
From a geographic perspective, the report found that the boards of banks in the UK, Finland, Ireland and the US have higher percentages of directors with professional technology experience than those in other countries, with sizeable increases compared with the 2015 findings.
However, the percentage of banks’ Board of Directors with technology experience is still very low in Brazil, China, Russia and various countries across Europe, including Austria and Italy.
“While it’s not practical for banks to make a rash number of tech-savvy board appointments to fill the gap in technology credentials, they should consider technology expertise as a factor for new appointments, alongside their other evaluation criteria,” Macchi said.
There are also other, more immediate ways to increase technology expertise among board members — for example, coach members on the latest developments on key technologies such as cloud, artificial intelligence and IoT to better understand how the combination of technology and human ingenuity unlocks value.
Boards can also tap into the expertise of third-party suppliers and make time to specifically discuss the technology strategy during board meetings to get the most out of their investments, adds Macchi.