Nine-in-ten bank boards lack professional technology experience

Around 90% of board directors at leading banks have confessed to lacking professional technology experience. The alarming revelation comes as digitialisation in the financial sector continues to intensify, suggesting many leaders in the sector are at risk of being left behind by the changes.

Digital technology has long been discussed as a potential ‘game-changer’ in modern business, with artificial intelligence (AI), cloud computing and Internet of Things (IoT) all being touted as ways for companies to save large sums of money in efficiencies, and improve security, productivity and customer experience in the process.

In particular, various reports have found that the banking sector has been among the fastest to take up new technologies in recent years – however, new research has found that many boards in the sector are still lacking technological experience – making them vulnerable to digitally savvy challengers.

According to a study by Accenture, building on a similar analysis in 2015, banking leaders have improved their professional technology experience – but not by much.

In 2015, the firm found that only 6% of board directors at leading banks had professional technology experience, and over the following five years, this rose by a further 4%. Worse still, of the 107 banks Accenture examined, only 15 said more than one-quarter of their directors had digital expertise, compared to the majority of 64, who said that fewer than 10% of their directors had such know-how.

Commenting on the findings, Mauro Macchi, leader of Accenture Strategy & Consulting in Europe, said, “Much of the disruption brought about by the pandemic has led to a rapid shift within banking to more digital touchpoints, requiring speedy technology investments. Banks that are accelerating their cloud adoption to better manage change would benefit from a board with technology experience that can help ensure that technology investments are compatible across various business units.”

This presents many banks with a problem at present – as while they are ramping up their technology investments to keep pace with changing consumer demands – such as the growing need for digital interaction and remote working as a result of the Covid-19 pandemic – their boards lack the technology expertise to minimise the risks and maximise the benefits of their technology investments. At the same time, digitally savvy challengers may find their ability to eat into traditional banks’ market share grows, as a result of this.

“While it’s not practical for banks to make a rash number of tech-savvy board appointments to fill the gap in technology credentials, they should consider technology expertise as a factor for new appointments, alongside their other evaluation criteria,” Macchi added in response to the slowness at which bank boards are becoming digitally experienced.

“There are also other, more immediate ways to increase technology expertise among board members – for example, coach members on the latest developments on key technologies such as cloud, artificial intelligence and the internet of things to better understand how the combination of technology and human ingenuity unlocks value.”

Positively for the UK, the country showed the highest level of board level technological experience in Accenture’s survey. While in 2015, only 14% of board members in the nation’s banks had technological expertise, that figure has almost doubled to 26% five years later. According to Accenture, this makes the UK’s financial sector a global leader in terms of board technology experience, having surpassed the former leader of the US – which has only seen experience increase by 3% in the same time.