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Banking boards will need to hone their digital IQ skills for future growth

Banks and other financial institutions need to bolster the digital IQ around their boardroom tables if they want to deliver true digital solutions to customers, says Simon Blissett, Cisco’s head of FSI and innovation, EMEAR

A decade ago, digital IQ was initially defined by PWC according to how well companies understood the value of technology and weaved it into the fabric of their organisation. However, the scope and scale of digital-driven change has grown and the ability to unlock value from investments in digital infrastructures requires a step change in boardroom skills.

Banks have embraced the concept of being customer-centric, but their traditional internal systems and the challenge of gaining a deep understanding of the digital landscape at board level may be hampering their efforts to deliver truly customer-centric digital services.

Blisset says: “The question to banking board members used to be: how can we be more digital? Then it was: how do we avoid being disrupted by the new digital players? The question now is: what would we do differently if we behaved and organised ourselves as a technology/digital company that does banking?”

The challenge isn’t limited to banking boardrooms. PWC, in its 2017 Global Digital IQ Survey, stated: “As companies embrace new technologies to deliver their strategy, they will need to invest in education and training to bridge the digital skills gap. Directors need to be educated on digital transformation and engage with emerging technologies in order to weigh in on the digital trend in a way that makes sense for the company and its plans.”

Blissett feels for banks’ board members: “Directors are personally accountable for the safe and prudent running of the bank. The pressure of being a full board member of a bank is massive. While we’d love our banks to be more  innovative and behave like disrupters, at the same time  we want them to protect our data and our money – to be conservative and safe. “                                        

This is why recruitment requirements for board members are evolving.  Blissett says, “There should be a specific section in the assessment process that tests board candidates’ digital capabilities and understanding of how to use modern digital solutions to transform banking -test the candidate’s understanding of digital trends and the role of digital to disrupt and transform their function and their businesses.”

He identifies the four key things clients want from a bank as security, convenience, trusted advice and being treated as an individual, not a number. “Most banks design products for segments of people. In the new world of digital, customers want products designed for them as individuals. You can’t do that if you have not digitised the core of the bank, and you can’t digitise efficiently if your board doesn’t understand that it goes beyond the end-user interface.”

But the digital imperative comes against a worldwide background of increasing regulation, which is moving from a focus on capital reserves and stability to how customer data is used, stored and secured. The Open Banking trend is based on the assumption that the data belongs to the customer not the bank and can be traded freely.- This at a time when the threat landscape has increased tremendously with cyber-crime now on an industrial scale.

Banks that understand this, Blissett says, are focusing on the core of the bank – the network on which the bank operates. They are implementing a new type of network – that is software-defined with inbuilt end-to-end security, a network that can be automated, a network with analytics and assurance built in, a network where policy can be implemented and monitored in real time – essentially the network acts as a sensor and enforcer.

Admittedly, this isn’t the sexy end of digital transformation – where so much time has been spent on developing new customer facing apps, developing new digital garages and working with Fintechs.  But without basic fundamentals such as having a digital ready intuitive network, digital transformation will inevitably grind to a halt (or crash in a major cyber attack).  However, get the basics right and we can truly have a connected world, with new banking models driven by Open Banking and new levels of security, speed and agility.

A board where all members have a high digital IQ regardless of function will have the edge.

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PWC 2017 Global Digital IQ Survey https://www.pwc.com/us/en/governance-insights-center/publications/company-board-digital-transformation.html