In a world where technology innovation is outpacing regulation, CIO risk management has risen on the priority list for IT leaders at UK banking institutions. Banks are vying to deliver ever more personalised and delightful customer experiences, and as a result, the currency of trust is becoming an ever-stronger force in separating the winners from the losers.
Just recently Andrew Bailey, Head of the FCA, appeared at the Commons Treasury Committee to address the legal uncertainty posed by Brexit on financial contracts and how this will impact insurers and banks, not to mention consumers who attempt to file a claim.
His comments will have resonated strongly with the bank bosses. Not only do they face the dire consequences from the market place of losing that trust – they may also face the wrath of the regulator as the FCA seeks to close the cultural lag. To quote Mr Bailey, “We expect banks’ policies on variable remuneration to reflect operational resilience. They have to – if they don’t, we will act.”
CIOs are at further risk as the threat of IT meltdown is exacerbated as banks embrace customer-centric strategies. Delightful and channel agnostic customer experiences require Agile methods and partnerships. Personalised engagement requires a 360-degree view of the customer that forces banks to break down silos across their organisation. And robust security programs are crucial as the currency of trust becomes a competitive enabler. All of these requirements are converging against a backdrop of aging legacy systems upon which many business-critical processes still depend.
The current focus on transforming traditional business models is intense. IDC estimates that 40 percent of all technology spending will go toward digital transformation, with enterprises spending in excess of $2 trillion by the end of this year. We’ve come a long way in just three years since Francisco Gonzalez, then CEO at BBVA, predicted the company would transform itself into a software company. In 2018, Brett King asserted that if you want to be Bank 4.0-ready, organizations must first strip their structure and operations down to the bones and begin anew, with a digital-first focus.
So, if banks are becoming software companies we must ask, how well do banks know their software?
The stakes are higher than ever. With the risk of regulatory non-compliance rising and the effort to retain customers becoming increasingly challenging, the urgency for bank CIOs to understand the complex systems upon which their business is built is essential.
This remains the primary question for CIO risk management and boardroom conversations as we move further into 2019.