Why banks need more tech experts in their board rooms

Massive adoption of tech without critical tech advice from experts could spell doom for lenders.

Artificial intelligence (AI), 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 banks.

But even with the rapid adoption of tech, banks’ board rooms still feature a severe lack of experts in this field. Only 10% of the board 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 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 Asian Banking & Finance in an interview.

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 the 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. 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 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 to their board? What challenges are banks facing in building up their board’s tech proficiency?
Banks have not 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 the 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 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.
 
What can financial firms do to build their bank board’s tech proficiency?
Banks should make technology credentials a consideration in new appointments. Other ways to bolster expertise can also be explored, such as coaching members on the latest technology, dipping into the knowledge pool of third-party suppliers, and setting aside dedicated time to discuss technology during committee meetings. Some big banks have even established an advisory council to keep executive management up to speed with the latest innovations.  

It’s all about finding ways to keep the corporate finger on the technology pulse; to be aware of key developments around cloud, AI, and the Internet of Things. These are technologies that will pose questions around security, compliance, and governance – issues that intersect with business fundamentals.
 
Could you give us examples of how the lack of tech expertise in boards or tech leadership, in general, have impacted banks, particularly in Asia, especially in the past year?
One of the many elements of our lives that may have changed forever over the past year, is the way we spend money and interact with banks. In addition to a surge in contactless payments, we have seen a rapid shift towards digital touchpoints—half of retail bank customers now interact with their bank through mobile apps or websites at least once a week. 

This shift did not only impact consumers; with banks having to pivot to remote work, employees at every level have been forced to sharpen their technology skills.  

The banks that pivoted successfully did so largely with the help of cloud technology, which enabled remote work and collaboration, quick upgrades of customer-facing applications, and helped banks deal with a flood of fraudulent transactions.  However, for many banks, cloud adoption is in its infancy; many of the industry’s important innovations—like mobile banking, data analytics for risk assessment, and personalised experiences would be impractical without the cloud. 

As banks try to keep up with the accelerated pace of change, broader adoption of cloud will be critical to modernise outdated legacy banking systems and adopt new business models.   
 
What are some good practices you have observed that banks in the APAC region have done to bridge the gap and build up tech expertise in their boards?
Some banks have introduced structured learning sessions to help boost tech expertise amongst board members. As part of these sessions, these banks bring in experts—both internal and external—to educate members on a broad range of technology topics and trends. Where possible, these sessions also leverage actual case studies as examples to showcase the real-life impact that technology expertise can have in boosting business in the finance industry. 

Taking this one step further, banks can also explore “digital safaris”. These are interactive showcases that show, rather than tell, what the future could look like with technology. Here at Accenture, we offer our clients the chance to experience our Accenture Digital Safari, where we showcase advanced technologies and how these are helping our clients create a competitive edge in their business. The live demos of AI, Blockchain, Advanced Analytics, Industry 4.0 and Extended Reality present executives the unique opportunity to fully immerse themselves in a technology-driven future, offering them a glimpse into the potential it can bring to their banks. 

Seeing and experiencing these opportunities through their own eyes may be the difference needed to motivate more board members to embrace technology.