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The new superhero: How CIO & CTO drive banks’ move to digital

(Image credit: Image Credit: Chombosan / Shutterstock)

Now, as CIOs of digital banks, taking deposits and processing digital payments is far more than just a core function and revenue source. It’s an incredibly valuable store of customer data that can help develop critical digital products. In order for digital banks and their CIOs to set themselves apart from their competitors, they must create a digital engine that can process it all while also shifting employees’ mindsets to focus on best practices in turning that information into lucrative products.

As ground-breaking digital technologies continue to reshape the banking landscape across the globe, Chief Information and Technology Officers have become their banks’ lead playmakers when it comes to preparing for the future and can now, with the right tools and support, revolutionise all aspects of operations.

According to a 2019 Deloitte CIO Insider report, globally, nearly half (46 per cent) of enterprise CIOs report to the highest levels of the organisation. The direct line to the CEO is repeatedly observed when the CIO is leading the enterprise through a digital transformation.

“CIOs that don’t report to the chief executive can still be viewed as critical strategic business partners - they just have to operate different levers to maximise organisational influence and strategically elevate IT. Corporate strategy and individual circumstances, relationships, and personalities are often more important than industry norms or other metrics,” according to the report. Once seen as merely tactical roles to help accelerate and improve bank operations, today’s most successful CIOs and CTOs have become strategic leaders whose day-to-day and long-term goals can determine their banks’ level of success.

To understand how CIOs became the cornerstone of the quickly evolving banking sector, it’s important to first understand how these executive roles are changing as banks move from being monoliths to more innovative and nimble organisations that can leverage data with tailored solutions to meet customers’ needs on a real-time basis.

In the previous era of banking, the CIO’s main role was about maintenance and making existing bank functions faster. Analytical, technology-focused CIOs have long been well-positioned to lead a data-driven approach to offer customers the kind of personalised services and products that are becoming standard.

CIOs at the forefront

The CIO’s mission is to shift the bank toward a more flexible, modular system that allows it to roll out and change services at a previously unthinkable pace. Today, fintechs create more intuitive features stemming off of nimble platforms that can be enhanced quickly and continuously. A truly agile platform is one that undergoes short, frequent releases with a constant pipeline of improvements that are automatically layered on top of existing cloud technology and allow the business to run uninterrupted on the front end.

With CIOs at the forefront of this digital banking revolution, monitoring those behaviours and analysing them to determine needs is no longer an anecdotal guessing game. To achieve this, banks, with the leadership of their CIOs, must become comfortable with handling a large amount of data created by their customers. Such a level of personalisation can help banks win word-of-mouth recommendations, which are critical in the financial industry where average consumers are often overwhelmed by the sheer number and complexity of options.

CIOs also need to expand their relationships within their banks with everyone from senior leaders in business and marketing to rank-and-file specialists in digital strategy, systems architecture, and infrastructure management and data management. Today, CIOs play a critical role in choosing third-party partners and developing performance requirements, and both short-term and long-term metrics for success.

Among the most important relationships in this new landscape is the one between the CIO and CMO, and product teams. Due to the rapid pace at which huge chunks of data can be turned into unique insights and ultimately new products, this partnership is critical to making a successful shift to digital banking. Though it will be a new kind of relationship, it will also be one that is critical for long-standing institutions as they compete against new entrants where it’s already built into the corporate framework.

More than change

At the same time, the CIO also leads the charge to be becoming good stewards of customers’ critical financial and personal data, and the bank’s first line of data security defence. The shift away from legacy systems is not an easy challenge. The CIO is the person who encourages the bank and its many employees to embrace an agile fintech mentality all while ensuring existing operations run apace. Those that make the transition from less secure legacy systems to cloud-based digital platforms can boast greater peace of mind for both their institutions and customers.

“A bank’s digital transformation is way more than, say, a pure technology-driven change. It’s about culture, behaviour and the way of working. How do you create an agile organisation that is able to learn from customer behaviour, to be responsive to it, have the fail-fast mentality, and invest into an MVP?” says Ron van Kemenade, Chief Information Officer at the ING Bank. “So we need to learn from nimble startups, from our customers, from tier behaviour and adapt our business model. And that’s what we’re trying to accomplish within ING.”

The CIO’s main goal in moving their bank to a digital platform is to bring all of its operations closer to the customers themselves. Through the use of analytics, banks can track their customers’ behaviours in real-time to understand their needs. According to a study by McKinsey , more than 70 per cent of customers prefer brands that use their information to make their experiences more efficient. In spite of widespread collaboration across the digital industry, many banking customers find themselves stymied by the industry’s inability to innovate at the pace of giants like Spotify and Adyen who use machine learning and open API systems to enhance their offering to meet customers’ needs.

The CIOs that are given the greatest levels of support, connectivity and flexibility to create and leverage big data technology in partnership with customer data management platforms and analytical tools will ultimately be the ones who help win the race to crafting the personalised experiences and solutions that today’s customers demand.

Ben Goldin, Chief Technology & Product Officer, Mambu