The Transformation of the Digital Banking CIO

As legacy financial institutions strive to provide more digital functionality, the role of the CIO has become more important than ever. CIOs must build internal collaboration, foster a start-up culture, acquire new skills and assume new responsibilities.

By Jim Marous, Co-Publisher of The Financial Brand and Publisher of the Digital Banking Report

To serve a changing market and respond to new competitors, retail banks and credit unions are rethinking and expanding the role of Chief Information Officer (CIO). Beyond improving the front-office and back-office digital functionality, the focus is increasingly on improving the consumer experience across the entire customer journey.

A survey of 50 banking CIOs by Cognizant sought to identify best practices for digital banking CIOs — in particular, how they partner with other department heads while integrating digital business capabilities into their organizations. The research also explored the challenges facing CIOs in their efforts to transform their organizations.

Among the key findings uncovered by their research:

• A large percentage of CIOs (45%) say they are leading the digital transformation charge, followed by the CEO (38%) and CMO (8%)
• 70% of CIOs identified organizational culture as the primary obstacle to digital business success, with 66% citing a lack of commitment from the board and/or CEO
• 55% of the CIOs feel their digital efforts have been successful, while 26% believe they have been moderately successful

CIOs also cited an increasing need to collaborate with chief marketing officers (CMO), sharing insights to improve multichannel experiences, product development, needs identification and personalization. Responding to these new challenges and expanded role, CIOs see the need to continuously remake and aggressively up-skill themselves and their organizations, according to Cognizant.

Drivers of Digital Transformation in Banking

Cognizant identified five primary drivers of digital banking transformation that provides the foundation for the CIOs new role and responsibilities:

1. Accelerated pace of innovation. New technologies are providing new opportunities for CIOs to advance their organization’s product and service offerings.
2. Expanded customer-centric initiatives. A more technologically fluent consumer  has forced banking organizations to focus on improved  insight-driven personalized experiences. Beyond basic digitization of processes, CIOs need to understand consumer expectations being set by non-financial organizations.
3. Multichannel distribution and consumption. The digital consumer expects a consistent experience across touchpoints and channels. While digital banking has changed basic transactional interactions, branch banking still remains strategically important. As a result, CIOs must consider all channels and customer touchpoints as part of a strong digital strategy.
4. End-to-end process digitization. CIOs need to digitize the entire systems landscape, from the front office to the back office.
5. Enhanced customer service through digital tools. CIOs need to utilize digital tools to deliver new service offerings (P2P lending, crowdsourcing, PFM, etc.), and provide meaningful and relevant customer service experiences.

The CIO as a Collaborator

As the importance of digital technology, delivery and innovation increases, so does the collaborative responsibilities of the banking CIO. According to the Cognizant research, “Banking CIOs believe the essential elements for a successful digital transformation revolve around leadership, filling skill gaps, developing a clear strategy and understanding the benefits enabled by ‘being’ (vs. merely ‘doing”’ digital.” This requires expertise beyond the capabilities of the CIO ...

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