A new type of CIO is required for today's banks

Traditionally CIOs in the banks have come from one of two backgrounds with a third one emerging.

Firstly there are those who started out as system programmers or maybe COBOL programmers who have risen through the key roles such as either Service Delivery Manager or Development Manager to finally make it to CIO. Their experience has been garnered from working for many years for one or more banks. They will have learnt about how old, fragmented and undocumented the systems are and will have had it hammered home to them how absolutely critical it is that the systems are up, available and working for customers. During their careers they may well have seen colleagues losing their jobs due to a system outage such as the ATM network crashing or systems in branches not being available. They see their role as defending the systems from change. As a consequence  and with the fragility of the systems in mind any changes required to the systems from the business are robustly challenged and when agreed to are implemented with great caution. These CIOs pride themselves on systems availability and cost reduction through minimising change. CIOs with this background can be described as ‘Technocrats

The second type of CIO is those who have come into their role by knowing how to work the system, how to manage the politics both within the IT function and with the business. Typically they may have come into the role from a non-traditional IT role such as IT Audit, Risk Management, strategy consultant, management consultant or even from an operational role within the bank. Whilst they do not have an in-depth knowledge of IT built from the experience of carrying out IT roles they are excellent at managing the relationships and politics of the banks. Like the ‘Technocrats’ they will typically be risk averse and a defender of the status quo. They can best described as ‘Bureaucrats’.

A new and emerging third category of CIOs come from one of the Indian  IT off-shoring companies. They will have been hired by the bank because of  the admiration that is held for the way that the Indian off-shore companies deliver software and services. With their adherence to CMMI and ITIL standards way above the level of most Western IT shops they are seen by many Bank Executives as the new way of delivering IT. They understand how to get the best out of the offshore suppliers and how to shake up and transform the internal IT functions. Their focus is on quality delivery of what they have been asked to deliver and no more than what they have been asked to deliver. Generally speaking they have little interest in the business – they might as well be delivering IT for a washing-up liquid manufacturer as a bank. They  see time spent on building positive, constructive relationships with the business as non-productive.  What they will do is take what the business asks for and deliver it – precisely. For those types of CIOs there is no need for business relationship managers but rather order takers and change managers. Their total focus is on delivering change using industry standards and to a high quality.  For them there is only one way to deliver IT and that is their way. They can best be described as ‘Delivery Ayatollahs’.

Whilst each of these three models of CIO have their role to play, a new type of CIO is needed for the banks. The reality is that there is far more significant changes in the banking industry than there has ever been before and the banks need to be able to respond to this. Never have the banks been under more scrutiny from governments, the regulators, businesses and the consumer.  Never has competition been so fierce and not just from traditional players. No longer can the banks be complacent about their customers when the fundamental basis for competition has shifted away from product pricing to the quality of the customer experience that is delivered and when the expectation of the customers has been raised so high by other players in the market such as Google, eBay, Apple and Amazon. No longer is it acceptable for a CIO to be simply focussed on the length of the batch window but now the businesses are looking to IT to help them work out the role of the bank in the online, real time, digital world. No longer can the CIO measure his or her success in terms of the size of their IT department when so much of it is delivered in an outsourced manner. These changes require that the CIO for the new banking world has to demonstrate a  number of characteristics.

Firstly they have be the CEO of an organisation delivering IT services to enable the business to serve its customers . As such they need to understand the impact they have on the bottom line of the bank of delivering those services, not how much it costs to run the datacentre, not how much it costs to operate the network, but the cost and revenue from processing a mortgage application and for producing a digital statement.  They need to manage the P&L for IT, much as their peers in marketing, operations, channels and products do for their businesses.

They also need to excel at supplier management. Since so many of the services that they ultimately are responsible for delivering to the business will be delivered by third parties both on-shore and off-shore then they need deep experience of sourcing, negotiating and delivering outsourced services. They have to be commercially very astute at understanding how to structure an arrangement that gets the maximum out of a third-party in the long term, which doesn’t mean just squeezing the supplier so hard that the deal hurts.

They need excellent relationship skills with their customers, the business. They need to be as passionate about the business results of the bank as their internal customers with the added expertise of understanding how these can be enabled through the smart use of technology. The CIO needs to be able to persuade, coach and lead the business – operate as a peer of each of the business heads.

They need to be as up to speed with the innovations in the banking and other industries as they do of what the latest technologies can do for the business. They need to be able to bring new ideas to the business in a way that the business can understand.

With all the regulations that are constantly changing and evolving the bank CIO needs to understand the implications of these on both the technology and the customer experience and be constantly looking at ways that the regulations can provide competitive advantage rather than holding the business back.

In short the new type of CIO that is required for the banks is the ‘Renaissance CIO’.  Just as with the Renaissance the new CIO has to be multi-dimensional, not just service-delivery, development, relationship focussed but all of those plus more.

Banks are beginning to seek out the Renaissance CIO – the introduction of Shaygan Kheradpir as the Global COO of Barclays Retail and Business Banking and the changes he has made is a step in the right direction (see http://www.itsafinancialworld.net/2011/05/barclays-cooscios-joined-at-hip.html ). However banks across the globe should question that given the ever increasing dependence on IT to deliver their services to their customers do they have the right type of CIO to lead their business forward?

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