Why Bank CEOs Hate Information Technology

You might think my use of the word “hate” in the title of this article is a bit strong, but I’ve never been in a bank where the CEO tells me how wonderful information technology is performing at the bank. Instead, I hear things like this:

• “It’s a money pit. It doesn’t matter how much I throw in, nothing ever comes out.”
• “My CIO has yet to utter a sentence that I understand!”
• “I can’t take my CIO to a Board meeting – the directors’ eyes glaze over within 30 seconds.”
• “This is the worst core service provider I’ve ever seen. They won’t even return my calls.”
• “Why can’t they take the lead? They respond only when I tell them what to do.”
• “It’s a tactical organization, they wouldn’t understand strategy if it bit them on the butt.”
• “They have never brought in a project on time and on budget.”
• “Why do we need to spend $2.5 million to license Microsoft products, when we’ve been using them for years?”
• “Why can’t they give me the simple information I ask for? Everything is a major production that takes forever.”
• “We just spent $1.5 million on a new Internet banking product, and the vendor went belly-up before we installed the system.”

Does any of this sound familiar? These are common laments in the many banks I visit each year. What is so frustrating is these complaints aren’t new – the same statements have been made for the last 20 years.

There is no question that action would be taken if the same disconnect existed between the CEO and finance or the CEO and commercial lending. So why doesn’t the situation with IT get better?

It seems to me the two principals, the CEO and the CIO (or however you title this person in your bank), are unable and apparently unwilling to work out the level at which they can effectively communicate and be understood. If you look carefully at the above comments, it is clear the CEO never knew what was going on in the information technology organization.

I think both the CEO and the CIO are to blame for this. Let’s start with the CEO.

When I try to discuss technology with a bank’s CEO, the most frequent answer I receive is, “I don’t understand technology, that’s why I hired Fred. He’s responsible for it and you can talk to him.”

In the same conversation I can inquire about any part of lending, deposits, investments, the new building and asset liability, and my questions will be answered in a clear and forthright manner. We do not expect CEOs to have detailed information about all of these subjects, but they have determined the appropriate amount of information necessary to understand the important issues. Why hasn’t this occurred in information technology?

Now let’s look at the CIO. Without a doubt, the most common phrase I hear when talking with the CIO is, “My CEO doesn’t understand what we do!” Are you seeing a pattern here?

Let’s give CIOs some credit and assume they have tried to “educate” their CEOs. I have seen some of the training, and it probably works for programmers, but it is too much detail for CEOs. Perhaps a middle ground can be found that enables information technology to become as important in the success of the bank as loans and deposits.

This middle ground is likely to be different for every CEO/CIO pair, so it’s important to not try to define specifically where it exists. Instead, the two individuals should be encouraged to begin a dialogue that defines how they can effectively communicate.

My personal favorite is through business cases. CEOs, who are usually from the lending or finance side of the bank, understand numbers. For every major new technology initiative, maybe the CIO and the project sponsor can develop a real business case that can be presented to the CEO in the appropriate forum. This is really no different than a new loan request from a business borrower.

There needs to be a rationale for spending money, some form of payback and a way to measure success. Perhaps with this start, the river can be bridged.

I’m looking forward to the day I ask a CEO about a technology initiative and I hear, “Let me tell you how we are going to use technology to process 300 loans per loan operations FTE!”

Hey, it could happen! -cf