How does senior management view information technology within your financial institution? Is it seen as a mysterious world with its own language? From this world, the CIO will occasionally appear with requests for huge investments in infrastructure and then disappear again for long stretches. The odd thunderstorm will disrupt service for a few hours, or a bolt out of the blue will disrupt email or other critical services for hours. Explanations for these events are delivered in an incomprehensible techno-speak and usually accompanied by a request for costly, unbudgeted “upgrades to the system.”
Hopefully, the management of information technology is a little more accessible than the example cited above, but bank senior managers may see some similarities in the scenario more often than they would like. If so, your bank might want to consider a review of your governance process.
Below are some steps considered critical to the development of an effective and strong governance process.
Understand the bank strategy. Effective governance can improve accountability, provide metrics, and improve budgeting for your bank’s information technology (IT) function, but the best argument for a successful governance is the improved ability to support the bank’s strategy and deliver value. If the strategy is not known, vague, weak, or cannot be acted upon, then IT cannot help advance the strategy.
[For more on IT management, check out: 5 Steps to a Healthy IT Culture.]
“The Bank will grow by 15% to more than $1 billion in assets in the next two years” is a goal, but not a strategy. A great bank strategy defines an achievable future state, and the business plan defines how the bank will achieve the future state in specific, practicable ways that will allow the bank’s stakeholders to contribute. With these parameters defined, developing a technology strategy with a defined roadmap to support these efforts and governing the purchase, deployment, and support of these endeavors becomes much easier.
Report the data. Most banks recognize the need to develop metrics and key performance indicators (KPIs) related to IT. Where banks sometimes fail, however, is in the analysis and discussion of this data. Examples of questions data gathering can answer include: What is the total available storage space available to our users? How many customers actually use the new mobile check scanning application? How many password resets does the internal help desk receive?
When management has this data, a governance committee can begin to insist on the analysis of the data to provide insights into the bank’s technology investment and a more proactive management of the bank’s assets. For example, why has the total storage space available to our users suddenly dropped within the last three months? Is this decrease a temporary occurrence or should IT plan expansion?
Develop a process. Compare the process your bank uses to approve a $150,000 commercial loan to the process your bank uses to approve a technology project for the same amount. In most banks, the loan approval process is clearly defined, widely understood, and well documented. The process encourages a careful consideration of the risks and returns.
Are the IT investments made at your bank subject to the same rigor? Is the expected ROI calculated and accountabilities assigned to ensure the goals are met? Unfortunately, many banks cannot answer this question in the affirmative.
Gather the group. Effective IT governance cannot be developed through internal conversations within information technology. An effective governance process should include voices from stakeholders across the bank. At its best, the IT governance committee can help break down silos within the bank.
Just as a CEO articulates his vision for the bank, a successful CIO will articulate, in non-technical terms, the technology vision and how individual decisions on information technology assets support the overall bank strategy (future state) and business plan.
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Paul Schaus is the president, CEO and founder of CCG Catalyst, a bank consulting firm providing strategic direction for banks. He leads a team of banking subject matter experts across North America. In addition to maintaining the firm's traditional consulting of business and ... View Full Bio