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Anz Banking Group
Key CIO Success Factors For Strategic Digitization
Sreeram Iyer
The global banking industry seems to be at crossroads these days, caught in between the declining profits and up-and-coming FinTech innovations, particularly in the areas of smoother payments and borrowing experiences. Facing a rather persistent drop in profit margins(just to maintain their existing Returns on Equity!), banks are now starting to experiment with new digital tools (such as Artificial Intelligence and Machine Learning, Big Data, Cloud Computing, Distributed Ledgers, Robotic Process Automation (RPA), etc.), which are starting to improve the Cost-to-Income ratios and, ultimately, the banks’ returns.
This evolving landscape in banking has also generated new and welcome challenges for the industry’s CIOs, particularly with regards to Strategy and Leadership. I would like to share three key success factors based on experience and exposure in the recent past - these could hopefully be useful for other CIOs in driving successful & strategic digitization in their organizations.
First off, organizational Strategy and alignment with it are really important. Moreover, it is not about the importance of strategy on standalone digitization, but rather the strategy of the Business to transform itself (with Customer Experience top of mind). CIOs are increasingly looked at more and more to play a deep role in aligning and executing this strategy to improve returns (in the case of banks). Digitization is not meant for CIOs and their functions only – but instead, for the organization as a whole. Some of the organizational questions that may come up in designing a successful Digitization Strategy are as follows:
What is the Company Board’s level of awareness and interest about the global Digitization trends?
Does the Company have a solid business strategy with full alignment from the individual business units?
Are the Investment Dollars prioritized in accordance with the above?
Another critical element is the Culture of an organization and CIOs ability to change it. Digital transformation is about shedding the past, injecting rapid change, designing customer-led improvements and engaging with all staff in a positive environment, despite elimination of several roles in most cases.
I am firmly convinced that the external context of banks will mean that CIOs have an even larger role to play in leading digital change
It is only after the above two aspects are addressed effectively that the CIOs can talk about ‘Technology’ (e.g. new platforms, channels and toolkits to bring about the digital transformation) - not earlier! This, of course, will require bold new ways of getting things done and will need the right acknowledgment that speed can be a competitive advantage. CIOs will need to become comfortable with “digital” governance that cuts across different organizational units, yet accommodates each one’s unique demands and pace, while also reflecting on what technology assets sit at an Enterprise-level and may need ‘protection’ while others at a unit level may need to be discarded. Funding and investments have to match digital ambitions, and CIOs play a huge part in this exercise.
These Leadership challenges require continuous drive from the top-of-the-house and by CIOs. It may be tempting to declare a Digitization victory too soon based on some front-end customer channel experience, while the rest of the organization has not changed culturally or where processes have not been truly transformed. This drive requires energy, time, constant communication, and rewarding behaviours.
Technology changes every Monday morning. Therefore, Organizational support for Lifelong Learning is extremely important – for business leaders and their staff alike. One of the notions I have recently encountered is that Leadership is too important to be left to the bosses. Continuing self-education is a great example where, in some organizations the 50-year olds are charged with deciding what the 20-somethings should be learning! Actually, in this increasingly digital age, the reverse holds true. The question for CIOs then is to ask if the organizational hierarchy is an enabler or is it a blocker for self-learning.
CIOs are busy trying to figure out implications and opportunities of Distributed Ledgers. Actually, from a cultural standpoint, I read that Distributed Leadership is more important than Distributed Ledgers. The traditional attributes of Company Leadership models over the last several decades, such as hierarchical power, corner offices, fancy titles, authority of position and so forth, will soon make way for what may be called “Distributed Leadership”. This pushes leadership at all levels because, unlike in the past, knowledge is now distributed, not concentrated. As a CIO, how you enable this change is a tough challenge.
To summarize, I am firmly convinced that the external context of banks will mean that CIOs have an even larger role to play in leading digital change. Clearly, there are many different ways of doing so, and I have shared the three main approaches which could be adopted to bring about the much-needed change: Strategic alignment, Cultural change and prioritized investments in Digital tools and capabilities.
The writer is the Chief Operating Officer of ANZ Banking Group’s Institutional Business. The views expressed are personal.
