While the pandemic has significantly accelerated adoption of digital technologies across sectors, there is a shocking lack of technology expertise and digital fluency in the boardrooms of the world’s largest banks, reveals a new report from Accenture.
Titled “Boosting the Boardroom’s Technology Expertise – Focus on Banking,” the report is based on an analysis of the professional backgrounds of nearly 2,000 directors of more than 100 of the world’s largest banks by assets.
Though banks are ramping up their technology investments to keep pace with changing consumer demands, their boards of directors lack the technology expertise to minimise the risks and maximise the benefits of their technology investments.
According to the study, only 10% of banking board directors currently hold or have previously held a technology role, or a senior role at a technology company. Among those with tech expertise, roughly a third are women, the study finds.
While these numbers looks really low, it is still an improvement from its 2015 study when 67% of banks had at least one board member with technology expertise, compared with 57%. One out of 10 banking board directors have tech expertise, a modest improvement over 6% in 2015.
“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,” said Mauro Macchi, who leads Accenture Strategy & Consulting in Europe.
Accenture said at least 25 percent of banks’ board directors should have technology expertise; however, at the current pace of change, the company anticipates that this won’t happen until the end of this decade.
The boards of North American banks rank better than their European peers. Just 9 percent of European board directors have technology expertise, compared with 18 percent in North America. The regulatory environment could be in play here. European legal frameworks requires boards to have strong legal and professional services expertise. 67 percent of boards overall today have at least one board member with technology expertise, compared with 57 percent in 2015.
It should be noted that the current market volatilities have forced financial institutions to accelerate their technology investments to bolster their resilience and drive growth. According to another recent Accenture survey, 68 percent of banking sector executives said the pace of digital transformation within their organization is accelerating.
Accenture recommends bands to boost its director’s technology quotient by helping them understand the technologies that are changing the world such as cloud, blockchain, artificial intelligence and the Internet of Things. Banks are advised to tap into suppliers and business partners to collaborate closely and invest in fintechs. Forming a technology board committee and a technology advisory council that advises the board and executive management on technology matters can help in this effort as well. There needs to be a balance between upskilling the existing board and appointing new executive directors and non-executive directors.