Bank CIOs enjoy a renaissance

Shadow IT pushes CIOs to get creative and embrace new opportunities.

Is there any industry facing the level of competitive, regulatory and reputational pressures that currently face the banking sector?

Banks are increasingly turning to technology for answers. At almost every level of their business, they’re hungry for innovations to launch new services, help monitor risks and prevent incidents that lead to large scale losses and reputational damage.  Technology is now essential for communicating with customers too.

So with all these competitive and regulatory pressures and a taste for technology, it’s little wonder that when new IT innovations come along, departmental managers want to make the most of them — even if it means ploughing ahead without the involvement of their central IT team.

Known as ‘shadow IT’, this practice of departments obtaining their own IT solutions is now commonplace and presents opportunities and challenges for a bank’s chief information officer (CIO).

According to the report, Art of Connecting: creativity and the modern CIO, 78 per cent of senior banking IT decision makers say that they’re now seeing the use of shadow IT within their organisations. On average, shadow IT accounts for 33 per cent of a bank’s IT spend compared with an international average for all sectors of 25 per cent.

Securing business

The growing appetite of a bank’s departments to go it alone with their technology investments is inevitably adding to their CIO’s workload.

According to the report, the amount of money spent on shadow IT is making 78 per cent of bank CIOs more concerned about the security of their entire technology infrastructure.   As a result of these concerns about the growth of shadow IT, CIOs are now spending 21 per cent more time and substantial budget on security.

Despite this, the changes resulting from shadow IT can also give bank CIOs a great opportunity to evolve their roles, capitalising on their strategic view of how technology and data are used within their organisations.

CIOs can see how different people and departments use technology to solve individual business challenges and how data is consumed and generated. CIOs can also spot opportunities or weaknesses within security systems across their organisation — spotting the gaps in protection — and can understand the wider impact and total cost of ownership of each shadow IT solution.

This means that a bank’s CIO is becoming more strategically important to their business and this is changing how boards view them.

The report found that 70 per cent of senior bank IT decision makers feel that the standing of the CIO is now more important in the boardroom.  Seventy eight per cent say that their board’s expectations of the CIO have increased in the past two years.

What’s more, 89 per cent say that their CIO now owns more business than technology KPIs (key performance indicators), with measurements around customer and employee experience featuring highly in their scorecards.

Opportunity knocks

To capitalise on these new opportunities, bank CIOs are becoming more creative, changing how they interact with the business and their colleagues.

The shift to a more strategic and creative role calls for a change in how bank CIOs engage with departmental managers. Pro-active, continuous engagement and communication are now vitally important if they want to influence their organisation’s technology decisions, give advice and set governance.

They should also look at their own team to ensure that they have the right skills in three areas – creativity, communication and commercial knowledge. These should be key factors CIOs consider when choosing technology suppliers too.

Banks not only face huge competition from their peers but also from non-bank challengers such as Apple and Facebook. In a case of fighting fire with fire, technology may help banks to respond to this by building customer loyalty, changing culture and achieving operational excellence.

The bank CIO’s rapidly changing role is being driven by a number of factors not least the rise of technology and shadow IT. For many, it’s a Darwinian moment and some can’t be certain that their role will survive. But for imaginative CIOs, an unprecedented opportunity exists to take the initiative and flourish.

*About the research

Art of Connecting: creativity and the modern CIO is based on a survey of 955 senior IT decision makers in the USA, UK, Germany, Brazil, Spain, Australia, Benelux and Singapore. The survey captures responses from CIOs in six sectors: banking, retail, energy & resources, transport & logistics, manufacturing and public sector and was conducted during November 2014 by independent market researcher Vanson Bourne.