Banks are increasing their technology investments to keep up with the digital transformation redefining the banking sector. According to an Accenture survey, 68 percent of senior banking executives reported that the scale of digital transformation within their banks is accelerating. Despite recent digital advancements in the banking industry, a large segment of bank leadership lacks crucial technological expertise. Lack of tech leadership can open up banks to threats such as data biases in algorithms and risky investments into incompatible technologies.
Bank board directors with technology expertise
New Accenture research reveals that in 2020 only 10 percent of bank board directors had technology expertise (defined as currently or previously holding a technology role, or previously having senior responsibility at a technology company).This is up from an earlier data point of six percent in 2015. Banks can increase technology representation in their boardrooms to a minimum of 25 percent to strengthen their technological stewardship and guidance, according to Accenture.
However, at the current pace of change, researchers do not expect this to occur until the end of the decade. Even 25 percent technology representation in boardrooms would be lower than that of most leading technology companies. Banks need to move quickly in recruiting board directors with technology expertise if they are to keep up with the overarching demands of digital transformation.
European boardrooms versus North American boardrooms
European boards are more technologically deficient in comparison to their North American counterparts. Just nine percent of European bank board directors have technology expertise, as compared to 18 percent of North American board directors. This is linked to stricter regulations in Europe which require strong professional services and legal expertise in boardrooms.
67 percent of boards overall have have at least one board member with technology expertise, compared to 57 percent in 2015.
Technology expertise in boardrooms is critical
Banks with tech expertise at the board level are more insulated against risks surrounding the implementation of digital systems. Banks lacking in tech leadership are more prone to mistakes around technological oversight when it comes to the understanding of complex machine learning techniques, the evaluation of vendors and unbiased AI algorithm development. Lack of technological leadership can lead to businesses investing in technologies that are not directly compatible with each other.
How to develop a tech savvy board
Banks have an opportunity to improve their directors’ “technology quotients” — the ability to explain and understand technology — according to Accenture. Regular coaching can build familiarity with technology and enable board members to more closely collaborate with tech voices outside of the boardroom.
Resources such as tech consultants, partnerships with tech firms and in-house technology experts can prove instrumental to broadening a businesses’ technological capabilities. Boardroom agendas can prioritize technology through dedicated discussion times and the creation of advisory technology councils or board committees. Aside from upskilling existing board members, technology qualifications should be given due consideration during the board recruitment process.
Bank leadership can also inculcate a creative and transformation inspired workplace culture that continues to attract technological talent. As banks acknowledge the scope of innovation, they can more effectively overcome outdated legacy systems and guide their businesses into the future.